Labour Relations: Business Must Bring Forward Strike Mitigation Strategies

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By Richard Gane | December 13, 2013 2:18 AM EST

Striking workers brings risk for firms - but are they prepared enough? (Reuters)

A steady rise in the number of strikes being held as a form of protest has left many public sector organisations exposed to the threat of walk-outs and, at worst, complete operational shut down. And as momentum for this kind of direct action grows, could it begin to impact businesses in other sectors?

Many of the grievances public sector workers feel - over pay and working conditions in particular - can also be felt across the private sector, particularly as better economic forecasts and a return to growth have brought discussions about pay to the fore. And while businesses may be well prepared for pay negotiations, having the necessary foresight to predict if and when strike action is likely to occur can be difficult.

The challenge becomes even more complex and unpredictable when one business is affected by a labour dispute affecting another business in its supply chain. In such circumstances, the risks involved can be extremely difficult to mitigate. Broadly categorised they can include anything from delays, disruptions, forecast inaccuracies and systems breakdowns to procurement failures, inventory problems and capacity issues.

How a business fares against these risks of course depends on the level of preparedness and it is important that some precautions have been taken to protect business continuity, especially at a time when worker unrest is becoming more likely.

Here are a few tips on what businesses should consider:

Research: When considering strike mitigation strategies, businesses should take preventative steps. This starts with doing the ground work and researching the companies you intend to build a relationship with within your supply chain. Start off by considering how their current industrial relations are and what their recent history is - for example, have they been involved in disputes previously or have they been in the press over matters that could disrupt future business? Having this intelligence can be crucial when determining how likely the onset of unrest is likely to be.

Rate the risk: Often businesses are caught out by strike action, either within their own business or within their supply chain because they have not properly calculated the risk. Many companies develop plans against recurrent risks but ignore low-likelihood risks. Above all, it is important to be realistic and this will very much be dependent on your business and how flexible it can be.

Dual or single-sourcing: Single sourcing has become the norm for many businesses, due to cost pressures, as well as the increased sophistication of suppliers as they seek to deliver complete end-to-end solutions. As a result, some businesses regard dual-sourcing as nothing more than an additional expense. However, strike action can expose single sources to significant operational risks. To avoid this, the business needs to decide if it can work around the supplier but still utilise the inbound supply chain, by connecting with suppliers' suppliers in order to bypass the problem. If the answer is yes, then single-sourcing would be adequate.

Stock-piling: Some businesses are able to overcome supply chain disruption by stock-piling inventory. But it is important to assess how quickly this can be achieved? The ability to predict when strike action is likely will help, but if the business decides to hold stock in reserve, this could lead to increased costs and impact on the bottom line.

Transparency: Improving transparency in the supply chain will allow businesses to understand where potential tensions may arise. Greater collaboration and open communication across the supply chain will allow for businesses to work more closely with their suppliers. It may also make it possible to stress-test the supply chain, to figure out how it might collaborate to ensure business continuity at a time of disruption.

Communication: Strike action is less likely to occur if businesses work closely with unions, and employee representatives, and involve them in key business decisions affecting the workforce.

Richard Gane is a supply chain specialist at Vendigital.

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