Ten tips for managing supply chain disruptions
The threat of potential disruption as supply chains become increasingly complex is the top concern for manufacturing businesses, a new survey suggests – with natural disasters seen as the greatest threat to apparel sourcing.
The research released by business standards company BSI and the Business Continuity Institute (BCI), suggests one-third of manufacturing firms are worried about possible disruption to their supply chains.
On top of this, more than three quarters of manufacturing firms (77%) report increasing supply chain complexity as the fastest growing risk in business continuity, with malicious attacks via the internet (68%) and increased regulatory scrutiny (58%) taking second and third place.
Global sourcing brings its challenges, too, with suppliers operating in riskier countries seen as the fastest growing business continuity risk. Natural disasters, man-made conflicts and a lack of resiliency in different countries’ ability to handle such events add to the potential for disruption.
Risk exposure varies by sector – with apparel supply chains scoring highest (85.6%) on their exposure to natural disasters thanks to the high proportion of manufacturing and raw material sourcing based in politically and geologically unstable regions.
“Recent global business continuity related incidents, such as the two days of strikes in Belgium that delayed 49,315 twenty-foot equivalent units (TEUs) of cargo at the port of Antwerp, have been thrown into the spotlight,” explains Shereen Abuzobaa, commercial director at BSI Supply Chain Solutions.
“Our data shows an alarming percentage of suppliers in a variety of the industries are based in areas with significant risk of natural disaster or man-made disruption such as these.
“Our experience shows that while companies are aware of and test for internal risks, they are failing to map or assess risk effectively across their supply chain. More often than not, only the first tier of suppliers is considered with no thought given to those further down the supply chain.
“Testing and assessing every supplier across every tier is prohibitively time consuming for businesses. By concentrating on higher risk suppliers, companies can be more effective and confident in mitigating risks."
The key lesson for organisations to consider is their planning for potential disruption – with the following top ten tips for business continuity planning:
- Identify critical business functions – Once critical business functions have been identified, it is possible to apply a methodical approach to the threats that are posed to them and implement the most effective plans.
- Remember the seven 'P's needed to keep your business operational – Providers, performance, processes, people, premises, profile (your brand) and preparation.
- Understand and track past incidents with suppliers – Obtain country-level intelligence so you understand what factors may cause a supply chain disruption e.g. working conditions, natural disasters, and political unrest.
- Assess and understand vulnerabilities and weak points – Conduct risk assessments to evaluate supplier capabilities to effectively adhere to your business continuity plans and requirements.
- Agree and document your plans – These should never just be hidden away in the mind of the MD. Assess your 'critical' suppliers to make sure their business continuity plans fit with your objectives and are defined within your contract.
- Make sure plans are communicated to key staff and suppliers – Equally, share them with other key stakeholders to boost their confidence in your ability to maintain 'business as usual'. This is particularly important for small businesses or those working with suppliers/buyers for the first time.
- Try your plans out in mock scenarios – If possible include suppliers in your exercises and remember to test them not only in scenarios where there may be a physical risk, such as poor weather conditions making premises inaccessible, but people risks such as supply chain challenges and boardroom departures.
- Expect the unexpected – While lean and efficient supply chains make good economic sense, unexpected events can have a significant impact on the operations and reputation of businesses.
- Make sure your continuity plans are nimble and can evolve quickly – If your plans look the same as they did ten years ago, then they probably won't meet current requirements. Organisations engaged in business continuity management will be actively learning from their internal audits, tests, management reviews and even from incidents themselves.
- Make sure you're not just 'box-ticking' – Plans which get the tick against the 'to do' list but don't actually reflect the organisation's strategy and objectives can lack credibility and are unlikely to succeed in the long-term. Instead, make sure your plans allow you to get back up and running in a way that aligns with your organisation's objectives.?
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