Current affairs

likemindedness for having a plan if something goes wrong?

Impact assessment

The responsibility for business continuity remains with your business – customers and stakeholders will not be sympathetic to supply failure, and the impact of a disruption needs to be thoroughly examined and understood. Supply disruption often originates below the

immediate tier one supplier, so it’s important to ensure that each critical supplier to your business has also considered its supply chain continuity as part of its own business continuity programme. By understanding where the significant

points of failure are in your supply chain, and by having a plan in place, your business is able to respond quickly to any severe disruption, and ensure that any financial or reputational damage to your business is managed, and that you can continue to serve your customers. Planning productively for supply chain

resilience results in a competitive advantage, and because you can get back in the market quicker than your competitors, you can benefit from a lower cost of recovery and gain market share.

Measures to take

There follows a range of measures that your business can take to increase your resilience to supply chain disruption.

Prioritise your suppliers Look to identify suppliers who are critical to the profitability of your business in terms of how valuable the items or services they supply are to you, the availability of other suppliers for the same items or services, and what alternative options exist for your business, such as white labelling. Not all suppliers will be equally important for your business survivability, and a detailed risk analysis of every supplier can be a time consuming and costly task. The recently developed RISCAuthority

supply chain online assessment toolkit helps businesses undertake an assessment of supplier criticality by asking a number of multiple choice questions that can be answered by you or the supplier (for more information, see next page). The assessments are then scored to help businesses identify and focus on priority suppliers – these are the suppliers that could have the greatest impact on your ability to maintain continuity of supply to your customers.

50 MAY 2019 Once the priority suppliers have been

identified, you can then work with them to understand where potential weaknesses might lie, establish what problems their failure would cause your business and help them to improve their resilience. Separately, your business can begin the

process of developing supply chain continuity plans against loss of supply of the items or services they provide, or implement additional risk reduction measures such as verifying and approving additional suppliers.

Spread suppliers geographically With more detailed knowledge of your critical suppliers, you can start to actively manage the risks. For instance, are all your key suppliers concentrated in one area of the country or even globally? Are these regions prone to natural disasters (earthquakes, hurricanes, extreme flooding, etc) or political unrest? By spreading your suppliers geographically, or pursuing local or regional manufacturing strategies, you reduce the probability of a single event having a disastrous impact on your business.

Manage supplier relationships Open up a frank dialogue with your key suppliers and seek to build closer relationships. In the event of disruption, you want to be the first customer to whom they give supplies or capacity. Working with your key suppliers can help

you move up the pecking order and secure preferential agreements. Enquire as to whether your supplier has its own continuity plans in place in case of interruption to its suppliers. Undertake research on its financial stability and the nature of the markets it operates in (are they in growth or decline?). Another tip for companies is to test suppliers’

resilience before there’s a crisis. Testing can be as simple as placing an extra large order without warning and seeing whether the supplier can deliver.

Research alternative suppliers Many companies seek to drive down costs and increase their buying power by consolidating suppliers, but tying yourself to a single supplier will badly expose your business in the event of a disruption. Undertake some research and identify alternative sources for your key products or services – this could help mitigate the risk or the severity of the disruption. If you are having difficulty transferring supply

to alternate arrangements, a key part of your supply chain risk strategy will be effective

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