To restate what is now a widely accepted fact, it is essential that organizations, whether they produce a product or provide a service, proactively manage their supply chain risks.
To fully meet this requirement, the entire supply chain – internal, upstream, and downstream – must be integrated into the company’s Business Continuity Management System (BCMS). This is true for all organizations; increasingly so when there is a high degree of dependency on the links in the supply chain.
It is therefore essential for supply chain business units to be actively and fully involved in all the stages of the business continuity lifecycleIt is therefore essential for supply chain business units to be actively and fully involved in all the stages of the business continuity lifecycle – full partners in the planning, implementation, and maintenance of the business continuity program. One example of this is in the analysis phase when an in-depth assessment of the many and changing direct and indirect threats to the supply chain’s ability to function as intended are identified and quantified.
Consider these examples of the many potential threats to successful supply chain operations: a supplier experiences a natural disaster shutting down operations for a week, a port strike disrupts shipping, or a niche supplier is faced with financial failure and goes out of business with almost no notice. If realized, each of these has the potential to make it impossible for the supplier to deliver on schedule or at all.
Other risk considerations are counterfeit products, geo-political upheavals, and even terrorist acts that can impact upstream and downstream deliveries. While some may consider these to be the responsibility of the supplier, from your customers’ perspective it is your responsibility and it is your company that will be negatively impacted.
Continuing through the BC lifecycle, based on the findings in the risk and threat assessment, the next step is to identify actions that can be taken to reduce either the probability or the consequences of the identified threats (mitigation).
The more critical the product or service provided, the more important the supplier’s business continuity capability is to your companyIdentifying the supply chain risks and threats provides valuable information, yet the information alone has little benefit without identifying and enacting mitigation measures to treat the identified risks. The myriad of supply chain mitigation possibilities includes carrying out a comprehensive vendor selection process that includes understanding the business continuity capability of these important business partners. The more critical the product or service provided, the more important the supplier’s business continuity capability is to your company. Ongoing monitoring of suppliers and service providers; having redundant suppliers for critical materials and services; and developing a geographically diverse network of suppliers are just a few of the additional steps that can be taken to mitigate operational disruptions due to weak supply chain links.
Mitigation is proactive and one of the most productive and cost-effective ways to address supply risk chain.
A well-developed and maintained and inclusive business continuity management system is fundamental to successfully managing supply risk and maintaining a reliable supply chain that is instrumental in meeting the expectations of customers and other interested parties.