Contingency – understanding the term in organizational perspective
Definition
Contingency refers to a possible event – an emergency incident that has no certainty of occurrence but can occur and can cause a problem or necessitate further arrangements. It may be an independent event or an event that happens to occur in adjunction to another event or a result of it. In the business realm, contingency planning refers to having a plan to handle such emergencies that cannot be predicted (Bloom & Menefee, 1994).
Article summary
An article on the development of a contingency plan for handling product recovery in a closed-loop supply chain was considered to understand the term to a better extent. In the study, the researchers state contingency planning to be the initial stage in the development of a formal set of plans for production and controlling the activities of product reuse for the ones obtained through the supply chain return flow. The study adopts the aspects that can influence the production planning of the closed-loop supply chain for product recovery through a contingency approach. During the research, three cases were considered to develop the framework for representing the common activities of various remanufacturing operations. The cases considered for the study include Remanufacture-to-stock, remanufacture-to-order, and reassemble-to-order for the determination of intermediate and endpoints of the supply operations in closed loops (Shaharudin et. al., 2019). Some of the characteristics that were explored include product complexity, quality, timing, evaluation complexity, return volume, and many more. The consideration of the contingency theory for such closed-loop supply operations tends to cut down the chances of similar issues along with providing a chance for the assessment and determination of other problems as well.
Discussion
One of the prime factors of the contingency approach is that it requires the firm to consider, assess, and prepare for an undesirable event that cannot be predicted or prevented. Under such conditions, the best step is to stay prepared for it and handle it efficiently so that the business processes are not impacted as a result of the disaster or the emergency event (Lentzos & Rose, 2009). As can be seen from the chosen study, having a contingency approach enables the organization to recognize the generalized potentials and be prepared to handle them in supply chain operations. It will not only enable the organizations to maintain their business processes smoothly but also help the firm to cope with situations faster when it turns unfavorable for them. With effective planning, they will also have a way to circumvent the incident as well. However, it is necessary to mention that the success of such contemporary stories requires a few more elements that contingency planning alone. In addition to contingency strategies, protection and resilience are the other two important elements of an effective contemporary plan of business development.
As the organization adopts a strategic and tactical approach to plan its operations, they understand the ways that the processes can be impacted and how they can be mitigated at the earliest. Having a contingency plan will help the organization to cut down damages, control public relations, maintain operations, and enhance the availability of credits. Thus, it is more than essential in today’s versatile business world.