BCM IN THE SUPPLY CHAINRupert 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

Management

• 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 maintenanceMaintain

Mapping for BCMMap 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.”

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