What happens to your project if your supplier runs out of stock?

Poor risk management can have serious knock on effects on your project. According to the 2006 publication Risk Management in Design, “the most obvious areas of design risk involve three standard categories – errors, omissions, and scope definition.” This article will be dealing with omissions as part of the risk management function of avoiding pitfalls and managing opportunities.

The UK’s Department for Business, Innovation and Skills (BIS), say that “most of your attention to risk will be to avoid or reduce the likelihood of events that might cause your project to be thrown off course. To manage and mitigate risks, you first need to identify them, assess the likelihood of them happening and estimate the impact they might have on your project.” In terms of risk management planning, some of the steps BIS recommends include prevention, risk reduction and having a contingency plan in place.

Should none of the above steps be in place, you might find yourself having to deal with the knock-on effects of unforeseen events. In their 2011, book “How to Manage Project Opportunity and Risk: Why Uncertainty Management can be a Much Better Approach than Risk Management,” Stephen Ward and Chris Chapman (linked to the book chapter) outline the following example of a knock-on effect: When things go wrong in activity A, the cost of activity A goes up and the delays impact on activity B. The cost of activity B then increases as a consequence. Other variables affecting the cost of activity B are knock-on effects that might occur. For example, resources set aside may no longer be available, and attempts to catch up lost time may lead to double or triple shift operation or changes to more expensive technology.

One such chain of unplanned events might occur if your supplier discontinues the line you had specified for the project at hand, and you don’t have a substitute in place.

If we translate Ward’s and Chapman’s example into our out-of-stock scenario, it is safe to say that a supplier running out of stock may slow your project down, as well as affect other areas of your project. To avoid not delivering on-time and on-budget, and consequently letting your client down, a specification manual listing specified manufacturers and noting quality standards as outlined by Cindy Coleman, the editor in chief of Interior Design: Handbook of Professional Practice, would be highly recommendable. Coleman also says “customers expect good experiences, and they deserve them… goods and services are not enough.”

Numerous factors contribute to and influence an interior designer’s service delivery – alliances, partners, contractors, and subcontractors. A well-researched choice will inform you on the probability of your supplier running out of stock. If the probability is low, The President of Passionate Project Management, Belinda Fremouw feels it is sufficient to develop a contingent response strategy designed to only be implemented if the risk event occurs as opposed to taking proactive action on the risk. She further recommends documenting a “Plan B” well in advance as that “will ensure that the project team is able to react to the risk in an expedient manner while hopefully minimizing any type of negative impact.” To conclude, don’t let your client down by letting your supplier leave you stranded.

This article is based on the best project management practices.