Supply Chain Insurance: Protecting Manufacturers Against Disruptions

Written By Charlotte Insurance on January 16, 2024. It has 0 comments.

Supply Chain Insurance Protecting Manufacturers Against Disruptions

Manufacturing companies have a lot to worry about. Not only do they need to have their quotas met and items produced sold, but they also have to keep an eye on the supply chain. After all, without the raw materials to make their products, the company would be unable to meet any of their customers’ expectations.

But what happens when the supply chain goes down? Well, chaos is a good way to put it. However, if your business has supply chain insurance, you’ll have a little less to worry about.

What Could Happen to the Supply Chain?

When one part of a supply chain breaks down, it can cause a ripple effect that extends throughout an entire industry. For example, if your business relies on a certain material, like steel or wood, and the companies that you usually purchase it from have a shortage, then your business will more than likely end up being affected. Being unable to buy a crucial component of your manufacturing process can lead to shutdowns, unhappy customers, and employees who have no work to do.

This happened during the Covid-19 pandemic, when companies had to rearrange their manufacturing processes in order to provide six feet of clearance between workers on the factory floor. Combine that with the fact that many people turned to home improvement products at the time, and the country ended up with a lumber shortage. Now, imagine what would have happened if your business relied solely on lumber or on products manufactured in a region that was hit particularly hard? It would’ve been in dire trouble.

What is Supply Chain Insurance?

Of course, pandemics aren’t the only thing that can cause a supply chain interruption. Others include natural disasters, political upheavals, and even strikes. Thankfully, there’s a helpful solution, no matter what caused the supply chain problem: insurance.

A supply chain insurance policy can provide your business with financial assistance and more should something happen to the process in which you receive raw materials. Any disruptions or losses brought about by supply chain issues can lead to a claim that will help keep your business running smoothly until the problem sorts itself out.

Is It Similar to Business Interruption Insurance?

Technically, supply chain insurance and business interruption insurance are different policies, but both will kick in when something happens to the manufacturing portion of your company. Supply chain insurance is designed to cover any business losses due to issues with the ability to get the raw materials that your business needs, while business interruption insurance will keep your business running and help you procure a new temporary location should a fire, flood, or other building damage occur.

Business interruption insurance can apply to other issues as well, but not necessarily to those brought about by problems with the supply chain. As a result, if you run a manufacturing company, it’s always a good idea to have multiple insurance policies for every possible issue that your business may face.

Have Questions? Contact Charlotte Insurance

Want to learn more about supply chain insurance for manufacturing companies? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your business needs.

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