Most IT managers and industry analysts say the weakest link in the supply chain is the small company that hasn't had the time or resources to work on the Y2K problem. Small companies are the least likely to have taken steps to confirm the Y2K compliance of their business partners, according to the InformationWeek survey.

Many IT managers are also concerned about the Y2K readiness of suppliers outside the United States. Some countries in Europe and Asia are more than a year behind the United States in their remediation efforts, and less-developed countries may be even further behind, according to a recent Gartner Group report.

"It's pretty safe to say that the banking system in Russia hasn't undergone thorough Y2K testing," says Motley Fool's Gibbs. "You could probably say the same about most of the countries in South America or Africa. Will that affect U.S. companies? Ask the people who lost money when the Asian markets went into a free fall."

New Gear
Then there's the question of the physical connections among business partners. Though most communications service providers say they're ready for the millennium, old communications gear might need to be replaced in public and private networks.

"Cisco says that certain models of its routers won't get Y2K updates," Gibbs says. "When I heard that, I went `ka-ching' in my mind, because that means throwing out old routers and bringing in new models. We've already got a few old machines that we're going to end up trashing."

Electronic transactions among business partners are also susceptible to Y2K problems. Many electronic data interchange service providers and their customers are in a mad dash to complete the transition to the American National Standards Institute's X.12 Version 4010 standard, which describes a method for replacing two-digit dates with four-digit dates in all EDI documents.

"There are a lot of companies telling their suppliers they won't pay them until they can send the invoice in 4010 format," says David Darnell, principal at SysTrends, an EDI and electronic-commerce consulting firm. But making the transition isn't easy: A company that does EDI might have 10 different transactions that have to be repaired, he adds.

If the millennium bug is likely to hit supply chains, you'd think most Y2K managers would involve their suppliers in their contingency plans and dress rehearsals for the date rollover. But many companies still haven't extended their contingency planning and recovery processes to suppliers, which no doubt will be experiencing problems of their own during the year-end frenzy.

"Our biggest initiatives for the rest of the year involve event planning--the what-if scenarios," says BankBoston's McManus. "So far, all we can really do is ensure that the lines of communications are open. A business unit may have to schedule a call to a critical supplier for a specific date and time, because those calls will be coming fast and furious in both directions."

Orlando's Matelski agrees. "We have had plans for power outages and system failures for years. Y2K doesn't present any new problems," he says. "What's different is that it will all happen at once. It's really going to test us and all the people we interact with."

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Illustration by Doug Panton