Essentially, a contingency plan is your “Plan B.” It specifies what to do if your planned outcome is disrupted. Business contingency plans outline the steps for the company to take in response to negative events. For procurement and supply chain managers, these include natural disasters, but also man-made occurrences such as negative news about strategic suppliers.
Contingency plans detail what to do, how to communicate tasks, and who will coordinate efforts, so the organization can continue or resume business operations as quickly as possible. Positive events, such as skyrocketing demand, can also disrupt plans and leave companies scrambling. High demand is one contributor to the current semiconductor and plastics shortages, for example.