BCM IN THE SUPPLY CHAIN Rupert Johnston

Format Acknowledgements. Reasons Why. Understanding the Supply Chain; Who and What are Critical? Strategies and Responses.

REASONS WHY

Why bother? 72% of respondents experienced disruption in supply chain. Top 3 causes were… Top 3 impacts were… 18% take supplier’s BCM for granted; most check paperwork not capability. 20% experienced reputational damage due to disruption elsewhere in the supply chain.

The Disruptive Economy A global marketplace exposed to interconnected & complex risks… Eyjafjallajokull Kenya: 10M flowers discarded, veg fed to cattle Japan: Nissan shuts down Europe: Fish, veg, fruit & cheese rot. N America: BMW slow down in production. Highest level of air travel disruption since WWII WHO OWNED THE SUPPLY CHAIN RISK?

Why bother ? Supply chains are business ‘arteries’. Ensure operations continue. Increase organisation resilience. Restore what's critical to an acceptable level, in an agreed timeframe. Enables you to increase influence on risks that aren't yours, but could be lethal.

Why bother? BS25999 PD25222 SCCM is important to organisations of all types and sizes, particularly as organisations seek to lower cost and enhance efficiency. Driving out inventory, time and other forms of waste means that goods, services, information and money are moving faster, which in turn means that the impact of an interruption in the supply chain will be felt sooner and more often. An increasing and significant proportion of costs lie within the supply chain for many, presenting both a risk and an opportunity. Poor supply chain managment can destroy value and jeopardise brand and reputation.

APPLYING BCM TO THE SUPPLY CHAIN (SCCM)

Supply Chains & Value Networks Supply Chain: “The network of organisations that are involved, through upstream and downstream relationships, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.” Value Network: “A set of inter organisational links and relationships that are necessary to create a product or service.” Internal and external

BCM Lifecycle Understand the organisation Determine BCM Strategy Develop & implement BCM response Exercise, maintain & review BCM Programme Managemen t Internal External Services & utilities Suppliers Type of relationship Map the Network Single points of failure Choke points Sole suppliers Identify Red Flags For each of your business’s ‘critical functions’ find the partners on the map. Assess the risks and impacts. BIA Options, strategies and response Determine Mitigation & Recovery Measures Assurance and maintenance Maintain

Mapping for BCM Map entire value network, internal and external, upstream and downstream, including all touch points: Manufacturing Suppliers (incl Utilities) Service Providers Warehouses Transportation, shipping & logistics Distribution Services Service Centers Supporting Technology Wholesalers Customers Information flows (DR strategies)

Dig Deep Who supplies your suppliers and outsourcers; who do they rely on? How familiar are you with the risks and issues at Tiers 2 & 3? Downstream issues. Value stream issues. Red Flags.

Red Flags Single points of failure Niche suppliers Choke points Sole supplier Failing business health No BCM System in place Consider your 3 key goods or service suppliers; any red flags?

What or Who is Critical? Relate existing BIA to plot key suppliers on Value Stream Map How does this relate to cost / value creation? Where are the profit pools? Any implications?

So What? Based on this… Who is critical? What risks do they face? How are they managing these? What do you require from them / they from you, in continuity terms (MSLs / RTOs)? What next…?

4 Broad Options Accept the risk Enhance your resilience / reduce dependency Develop recovery strategies independent of suppliers Work together to improve resilience

BCM Strategies & Response Focus… Select low-risk suppliers / have multiple sources for critical supplies From different geographical locations / identify alternate suppliers Make sure they are responsive at short notice Increase your inventory levels / ask supplier to maintain an inventory of your critical supplies Purchase the supplier Contracts & enforcement

BCM Strategies & Response Partnering arrangements Visit exercises. Exercise together; enhance plans and comms. Examine systems and capability, not just plans. Embed BCM into the relationships across the whole network – introduce an ‘SCCM Programme’ Continue to seek assurance

After the Fact… Following reputational damage and an increase in operating costs at your company due to a significant disruption to your supply chain, which was beyond your direct control, you are asked the following: When did you become aware of the threat that caused this disruption? If you didn’t know about this threat, why not? If you did know, what did you do about it? If you didn’t do anything, why not? As it stands today, are your answers credible?

QUESTIONS

21 “Everything an organisation needs to plan for, respond to and recover from significant business incidents and disruptions.”