How Contingency Plan as per IATF 16949:2016 | with Example

Every organization must have a contingency plan as per IATF 16949:2016 standards. It is a mandatory requirement of IATF.

What IATF QMS standard say is, the organization must have a actions to addressed risk and opportunities (IATF Clause 6.1).

The clause is clearly mentioning the method of contingency plan to addressed internal and external risks. These risks have been impacting the production output and customer requirements.

Therefore, every organization must create the contingency plan to overcome those risks and fulfill the customer requirements.

This complete article is explaining the actual example of contingency plan and give you the better understanding.

contingency plan as per IATF for all contingency in organization

What is contingency Plan?

When the manufacturing processes are deal with some internal or external risks or disaster then it will stop the output. It leads to non-fulfillment of customer requirement and supply.

Then to avoid and to have a plan B from Plan A we must have that kind of contingency plan.

Contingency Plan | detailed example


This instruction shows the determined action plans to meet certain contingencies which may affect our customer supply of product. 


In general, the Contingencies cover the unforeseen events such as:

  1. Labour shortages
  2. Utility interruptions
  3. Key machine failure
  4. Transportation problems
  5. Purchases

The responsible Heads inform the PLANT HEAD and the Customer as appropriate & take approvals when required.

Identified contingencies:

Sr. No.Description of ContingencyResponsibility
1Operator absenteeism (labour shortage) – Minor & IntermittentHR & Prod. Manager
2Operator absenteeism (labour shortage) – on a large scaleHR & Prod. Manager
3Delay in purchase of material from distant suppliersPurchase Manager
4RM Shortage from Customer (Customer provided RM)Supply Chain Manager
5Key Machine FailuresMaintenance Manager
6Compressor break-down/not working to full capacityMaintenance Manager
7Power failure from Electricity DivisionMaintenance Manager
8Diesel Generating set used to maintain office communicationMaintenance Manager
9External problems affecting movement of materialsProd. & Quality Manager
10Stoppages due to component / raw material quality problemsProd. & Quality Manager
11Field or Customer ReturnsQuality Manager

Contingency #1

Operator absenteeism (Labour Shortage) — Occurring on an intermittent basis and involving only a few labour

Operator absentism plays major role and one of te contingency plan point
Contingency Plan

1. Divert another operator to do the same job (Refer: Skill Matrix)

2. Change the production plan requiring lesser manpower. Here, it should of course, be ensured that the customer’s delivery schedule is not affected by change in plan.  (Ref: Weekly, Daily Delivery Plans) 

3. Interact with HR, in case the absenteeism/shortage is likely to continue.

4. Arrange for replacement of temporary workmen. In the case of permanent employees, arrange for on job training and rotation of alternative personnel.

Contingency #2:

Labour shortage occurring on a large scale involving many workmen. 

This situation usually happens during festival, other holiday periods or strikes.

Contingency Plan

1. Take anticipatory action by planning for and producing the required items prior to the expected holiday period (Ref:  Delivery/Production plans)

2. Use the available manpower to produce only the immediately required items. Remove manpower from non-critical areas (Ref: Skill Matrix, Delivery/Production Plans)

3. If the shortage persists for more than 2 days, discuss with HR Head, and arrange for – Replacement of temporary workmen.

4. During this period, judiciously grant any leave to the personnel.

Contingency #3

Delay in purchase of material from distant suppliers

Delayed in raw material supply from supplier
Contingency Plan

1. Arrange for Special transport/ train/ air lifting a suitable quantity. This has to be approved by PLANT HEAD

2. Arrange for supply during this period from a local source.  (Ref: Purchase records – Approved vendor list).

3. Based on the expected availability of the delayed material, change the production plan so that the available material is utilized for only the required products

Contingency #4

RM Shortage from Customer (Customer provided RM)

RM shortage from customer
Contingency Plan

1. communicate to the Customer well in advance before the RM/materials are consumed.

2. Plan for holiday/week-off working if possible.

Contingency #5

Key Machine Failures: 

100T Press, Robot Welding Station, Resistance Welding Gun, etc.

Key Machine failure is major contingency/risk in any organization
Contingency Plan

1. By our experience any major failures in the above Key machines can be repaired within maximum 8 hour’s time, which would not affect the further production. However, if the repair would exceed more than 8 hours, the production may get hampered. This will be brought to the notice of PLANT HEAD and the Customer immediately to arrange for appropriate actions.

2. Expedite repair/servicing of the machine.

Contingency #6

Compressor break down or not working to full capacity, resulting in sufficient line pressure to run all-pneumatic controlled machines

compressor breakdown possibly consider as line stoppage situation
Contingency Plan

The provision of the compressed air is a major requirement of the machines to operate. Hence a system of stand-by compressor is available and can be immediately used during this contingency.

Contingency #7

Power failure from the source of Electricity Board

Electricity power failure leads to major plant shutdown for some moment
Contingency Plan

1. The Power generator is available to support the power shortage caused by shutdowns / load shading / break downs etc. caused by the power provider company the great electricity board.

In an event of sudden power cut, the generator set automatically starts & provide uninterrupted supply.

On the resumption of the regular power supply the generator set is switched off by itself.

2. The provision of power is made to vital & key manufacturing equipment so that the product supply to the customers does not get interrupted causing delay in supplies to the Customers.

3. For further information, contact the electricity board office and check the status of the shut down time, it’s seriousness, duration and expected time of resumption of power to ensure that sufficient diesel is available for the power generator to be kept operative.

Contingency #8

Diesel Powered Generator set used to maintain office communication

Diesel powered generator for power failure situation consider as contingency plan
Contingency Plan

A small diesel generator is available with PRD for the use of providing power supply to the Office area so that computers are kept operative to maintain the communication with the customer.

Contingency #9

External contingencies like strikes and all which especially affect transportation and movement of materials.

strikes take place by many people and mob shows the major contingency risk for transport
Contingency Plan

1. If the problem can be anticipated in advance, take action by planning for, production and dispatching the required items prior to the expected interruption period (Ref: Delivery/ Production plans).

Customer concurrence should be obtained for dispatching ahead of the required date.

2. Expedite supply of required materials from sub-contractors, ahead of the interruption period, so that any material shortage/production stoppage does not occur during this period.

Contingency #10

Production stoppages due to component / raw material quality problems 

Production stoppage due to raw material shortage contingency plan
Contingency Plan

1. Immediately communicate to the Customer / Customer representative.

2. In case Customer directs the supplier for the inspection / segregation, QAE extends the required arrangements to the supplier to carry out his activities.

Contingency #11

Field Failure & Customer Returns

Field failure or wrraty failure product contingency
Contingency Plan

1. Immediately do communication with the Customer to know the seriousness of the Product requirement.

2. Arrange to send the required Qty. of the Product returned by the customer based on the discussion & requirement of the Customer from the Stock, if available.

3. Identify the Returned Material separately to do analysis of the return.

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