Supplying disaster Featured

10:03am EDT July 22, 2002

Maybe you're one of the few smaller companies that is confident it can survive the Year 2000 computer glitch. All the systems have been checked, a consultant verified the results and you've gone back to running the day-to-day operations. But have you considered whether your vendors are ready?

The Year 2000 problem, which causes computers to read 2000 as 1900 because the programming only looks at the last two digits, could cause a domino effect in the supply chain if just one company has to shut down.

How many suppliers do you have? What would you do if on Jan. 3, the first business day of 2000, your major supplier couldn't deliver any more goods indefinitely? Could the business survive? Is there a backup plan?

When it comes to Year 2000 compliance, you can only control your own company's preparedness, but finding out what other businesses have done to prepare themselves can help keep your disruptions to a minimum.

Start by sending a letter to all of your major suppliers and distributors asking about their compliance.

"When you pose that question, you also need to find out what their definition of compliance is," says Corinne Gregory, vice president of product marketing for Data Dimensions, a software-development firm specializing in the Year 2000, or "Y2K" computer problem. "There is no industry-standard definition. It might mean they are using four digits to calculate the date, or they may say their systems aren't date-dependent and won't be affected."

There could also be a problem if you are exchanging electronic information. Systems that previously were compatible may foul up dates if different methods are used to fix the problem. If another company isn't in compliance, but is exchanging data with your company, you may import the problem from them.

Remember, Y2K isn't just a computer problem. Anything with a computer chip that uses any sort of date stamp could be affected, which might include phones, elevators or in some cases vehicles. If the supplier's computers work, that's great, but if their phone system is down for an extended amount of time, how will you place orders?

Be sure to consider all suppliers, including the supplier of your building space. If you lease a building, who is responsible for the systems in it? Find out before Jan. 3, 2000.

"From a legal standpoint, look at your contracts and determine whether you are bound to your vendors and suppliers and what happens if they can't deliver goods or services," says Gregory.

Compliance inquiries should be mailed out on a regular basis to check the status of each vendor. A company may have missed its compliance target date, so it's important to keep close watch on key suppliers and distributors.

Small- and medium-sized businesses may be hit the hardest by the Y2K problem.

"Their main focus is the day-to-day operation of the business, not the Year 2000," says Gregory. "Most small businesses don't have the resources to outsource the problem. It can really sap the resources and time of all of the in-house IS staff, assuming they have any. It's prudent to assess where you are, what the risks are and what you can do about it.

"I believe that everyone down to the consumer level is going to feel the effects of Y2K in some way, shape or form."

Utilities have been identified as being very susceptible to this problem, and many have been slow to address it.


Have a backup plan

On Jan. 3, 2000, there may be no electricity and no phone service. What would that do to your business?

"If you've been putting off upgrading your PC network, now might be the time to do it," says Gregory. "If you use point-of-sale hardware or software, do you have a manual backup method you can use until you can get the system going again?"

If the security system is noncompliant, you may not be able to even get into your business to find out what's not working.

"Everyone needs to have a backup plan," says Gregory. "You need to have any agreements with alternative suppliers in place early."

If a major industry supplier goes down, everyone will be looking for alternatives. If you've already set up an agreement, then you will have an advantage over competitors who do not.

Data Dimensions recommends considering the answers to these questions:

  • When are my vendors going to recognize the millennium-date problem?

  • Will my vendors be able to fix their problems before my business processes require century dates?

  • Can my vendors afford to fix their products, or will they abandon them?

  • What approaches will my vendors take and will they be consistent with my standards or force me to customize my processes?

  • What will be the cost, resource requirement and time available when I get their solution?

  • Are my vendors dependent on other suppliers that may not perform or perform in time?

  • How much are my vendors' solutions going to cost me, and when will we have to pay for it?

    Data Dimensions also manufactures the Ardes 2k Optima, a software package designed to help small- and medium-sized businesses through the use of step-by-step guides to address the problem from an information technology, legal, human resources and other department viewpoints. SBN

    For more information, go to www.data-dimensions.com.