You are only as resilient as your weakest link
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Transcript of You are only as resilient as your weakest link
YOU ARE ONLY AS RESILIENT AS YOUR WEAKEST LINK
SUPPLY CHAIN CONTINUITY MANAGEMENT
BCI SW FORUM – 24 NOVEMBER 2015
PRESENTER: DUNCAN FORD MBCI
15/12/2015 1
INTRODUCTION
3
All of us participate in supply chains these days but what do we need to do to stop an incident affecting a supplier becoming a news-worthy failure for us?
This presentation responds to this question through an overview of the new ISO Technical Spec 22318 on supply chain continuity management followed by discussion of a case study looking at pre- contract preparation and ongoing assurance.
MFI tackles supply chain problems
Shares in MFI Furniture have jumped by more than 5% after it
reassured investors that problems with its new supply chain
system were being solved.
In September, the company issued a profit warning as delivery
problems meant some orders from customers were failing to
reach their destinations.
G4S Olympic failure prompts ministers to 'think again' over outsourcing
MAPPING ISO/TS 22318 TO ISO 22301
6
Operational planning
and control
Business impact
analysis and risk
assessment
Exercising and testing
Establish and implement business continuity procedures
Business continuity strategy
Main Point: The substantive clauses of ISO/TS 22318 coincide with the elements of business continuity management
ISO/TS 22318
Why supply chain continuity is important – Clause 4 [Plan]
Analysis of the supply chain – Clause 5 [Plan]
SCCM strategies –Clause 6 [Plan]
Managing a disruption in the supply chain – Clause 7 [Do]
PerformanceEvaluation – Clause 8 [Check & Act]
WHY SUPPLY CHAIN CONTINUITY IS IMPORTANT
THE STRUCTURE WITHIN WHICH SCCM IS CONDUCTED
Operational planning
and control
Supplier D
Supplier C
Organisation
Inbound
lo
gis
tics
Outb
ound
logis
tics
Customer
Tier 2 and beyond Suppliers
Tier 1 Suppliers
InternalRelationshi
pSuppliers
Tie
r 2
Inbound
lo
gis
tics
ExternalSupplier A
Supplier B
SUPPLY CHAIN MODEL
Incre
asin
g f
lexib
ilit
y
Decre
asin
g a
bility
to in
fluence o
r contro
l
National/international transport and distribution
networksinfrastructure
regulation
Single sources of supplyLong term contracts
Complex components, raw materials, Fixed asset dependencies
Information, Consumables, Mobile assets (people, vehicles)
FLEXIBILITY INFLUENCE AND CONTROL
Sourcing strategy
Prequalify
Short List
Develop a request for
offers
Analyse the offers
Award to a supplier
Manage the relationship
Specification
description
BCM resource
requirement
INTEGRATION
WHY SUPPLY CHAIN CONTINUITY IS IMPORTANT
- KEY POINTS OF CLAUSE 4
11
• A supply chain exists wherever an organisation’s product or service delivery
depends on inputs that are not under its direct management or control.
• Supply chain continuity is important in a global, interconnected and fast-moving
world, in which organisations spend a significant proportion of their total costs via
their supply chains, which are exposed to new and elevated risks.
• The onus is on organisations (and not their suppliers) to mitigate their supply
chain risk and respond to supply chain interruptions.
• What matters is a supplier’s demonstrated continuity capability to reinstate the
supply of the product or service
Main Point: SCCM mitigates an organisation’s risks of disruption, and enables an organisation to respond to interruptions within the supply chain.
ANALYSIS OF THE SUPPLY CHAIN
CONSISTENT ANALYSIS OF ALL SUPPLIERS ALLOWS AN ORGANISATION TO
UNDERSTAND THE RISK AND IMPACTS OF DISRUPTION IN THE SUPPLY CHAIN
Business impact
analysis and risk
assessment
MODERN SLAVERY
15/12/2015 13
Since October, the Act requires companies with global revenues of over £36m – more than 12,000 firms – to provide an annual disclosure describing their efforts to weed out slavery and human trafficking in their global supply chains.
The BBC alerted the owner of Zara, and the company's director of corporate social responsibility flew to Bangladesh to investigate. Although it transpired that no Zara clothes were being made at that particular factory when he arrived, he agreed it was a dangerous environment and using the clout of a huge multinational buyer, he got the factory moved to new premises.
AA
Gather relevant informationBIAList of suppliersRisk assessments (5.3.1)
Define organisational approach Define supplier criticalityEstablish breadth and depth of analysis requiredDefine BC requirement for suppliers
(5.3.2)Working with suppliers
Constructive relationshipsUnderstand dependencies/risks of suppliers’ own supply chains
Conduct analysisRequest information from suppliersConduct information gathering visitsCompare with defined requirement
(5.4)
Output of analysisResults of analysisAssess risksMake recommendations to improve resilience
(5.5)
Develop SCCM strategiesDevelop risk mitigation plan including continuity strategiesReview contractual process to incorporate SCCMSeek opportunities for change
(6)
Analysis SolutionsReview process and Findings
(8)
ANALYSIS OF THE SUPPLY CHAIN
- KEY POINTS OF CLAUSE 5
15
• Any analysis should be undertaken jointly with suppliers, who in turn should be
responsible for cascading the analysis to their suppliers.
• The analysis should be based on a set of core criteria developed by the
organisation that should define the analysis process and the business continuity
requirements for suppliers.
• Key outputs from the analysis process include an overall assessment of the level of
risk posed by the supply chain and by specific suppliers within it.
• Supply chains are dynamic so business continuity requirements should be built
into tender/procurement and supplier management processes, and the overall
analysis process should be repeated periodically.
Main Point: The output is an auditable report for each supplier that identifies that supplier’s continuity provisions vis-a-vis the organisation’s expectations, including management, threats to supply, and recommended improvements.
SUPPLY CHAIN CONTINUITY MANAGEMENT STRATEGIES
APPLY AN APPROPRIATE STRATEGY TO EVERY SUPPLIER
Business continuity strategy
OPTIONS
• 1 – ACCEPT STATUS QUO
• 2 – REDUCE DEPENDENCY
• 3 – INCREASE RESILIENCE
• 4 – WORK WITH THE SUPPLIER
• 5 – END THE RELATIONSHIP
15/12/2015 17
SCCM STRATEGIES
- KEY POINTS OF CLAUSE 6
18
• The choice of the best strategy(s) depends on identifying and highlighting the most
critical suppliers.
• Where cost-effective, choose strategies which allow the organisation to reduce the
impact of disruption independently of the supplier. Where it is not possible to mitigate the
impact, a continuity solution should be developed in cooperation with the supplier.
• The requirement of suppliers to put in place an effective business continuity solution for
themselves and their supply chain needs to be incorporated within the supply contract.
Critical suppliers need to provide evidence of this, both at the time the contract is
awarded and as part of ongoing assurance.
• The contract/agreement needs to define information exchange and plan invocation
procedures to be used between suppliers and customers.
Main Point: There is a range of potential continuity strategies for building greater resilience in the supply chain. Focus should be on the most critical suppliers and when possible the requirement should be incorporated within supply contracts.
MANAGING DISRUPTION
ENSURE APPROPRIATE PROCESSES ARE IN PLACE TO MANAGE AN INCIDENT
Establish and implement business continuity procedures
MANAGING A DISRUPTION IN THE SUPPLY CHAIN
- KEY POINTS OF CLAUSE 7
20
• Include supply chain continuity management arrangements in BC plans, and
exercise with suppliers to improve coordination of each other’s issues.
• Ensure an agreed procedure is in place for suppliers to alert the organization
to potential incidents as early as possible.
• During an incident, ensure that command and control is integrated. Post-
event, conduct a thorough, shared review of what happened and lessons
learned
• Co-ordinate external communications plans.
Main Point: Ensure regular, open discussion with between parties to create a partnership between the organization and the supplier.
PERFORMANCE EVALUATION
- KEY POINTS OF CLAUSE 8
22
• Performance evaluation includes monitoring, verification, validation and review of
SCCM arrangements, stimulates continuous improvement and provides assurances
in the supply chain.
• The onus is on the organisation to ensure that SCCM provisions required to protect
its critical activities or processes are maintained.
• Owners of supplier relationships need to have appropriate triggers and escalation
pathways in place to alert and deal quickly with changes to critical supplier
performance.
• Regular engagement with suppliers through update meetings or calls is essential to
maintaining supplier relations.
Main Point: The assurance process includes analysis, performance indicators, evaluations, escalation of non-performing suppliers, review of processes from procurement to BCM, and review of contracts and clauses.
This presentation was delivered at a BCI forum event. For details of upcoming events please click here.
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