Home' MHD Supply Chain Solutions : MHD Mar-Apl 2016 Contents R
ecently I completed a consultancy
project with a company and, discussing
the results with the managing director
and supply chain manager, I asked them: “Have
you thought lately how your business would look
if you had a major incident that occurred within
your supply chain, through either economic
downturn or disasters?”
I was surprised: they only realised what could
happen if they didn’t have back up plans in
place after our discussion.
IBM recently discussed that in organisations,
boards of directors now assume a greater
degree of accountability and have begun to
fully understand the importance of instilling
a risk-aware culture to gain better visibility
of risk. To be effective, risk-based strategy
requires a cross-functional and coordinated
approach to synchronise the activities of
different operational functions.
In a recent article in the Supply Chain
Quarterly (Q2 2015), Adam Brosch, director
global sourcing for Berlin Packaging identified
six international sourcing risks where he
mentions the following:
1. Time differences,
2. Language barriers,
3. Quality expectations,
4. Compliance issues,
5. Productions scheduling and
and how we should mitigate them via
Dr Edward Knab recently advised that most
businesses are already experiencing major
challenges in their supply chain, resulting from
the downturn in the global economy. Significant
unexpected costs, delays and increased
disruptions at importers and exporters will also
play a part.
So what are they and how can we
apply some strategies to them?
Lack of working capital. Businesses are being
forced to consider non-traditional sources of
working capital, often found in the company’s
internal operations. Companies are reducing
inventory to free up operating cash, rationalise
product lines to focus on profitable products,
and lower operating costs by increasing
Economic downturn risks. This has translated
into major restructuring of supply chain
operations in an attempt for businesses to
survive if the downtown continues, and to better
position themselves for additional market share
and profits when the economies around the
world begin to recover.
Energy costs. Businesses must plan for
variable energy and commodity prices, as well
as variable labour and currency exchange rates.
Financial risk. There will be a rise in supplier
bankruptcies and companies will need to
re-evaluate their supply chains to identify and
support key partners and reduce the number of
potential weak-link suppliers.
Recovery prediction. Economic recoveries will
likely be unpredictable, the ability to quickly
react to global shifts in demand will be critical
Disaster recovery plans (DRP) have gained
momentum, due to the accelerated adoption of
technology across global businesses. Business
continuity plans (BCP) have become a broader
extension of DRP, including all processes,
procedures, decisions and activities that are
essential to ensuring that organisations can
continue to function.
So what’s a BCP?
It’s when a company recognises that a sig-
nificant threat exists to its ability to continue
normal business operations, following a serious
unexpected disruptive incident. The company
further recognises that it needs to recover from
disruptive incidents in the minimum possible
time, and that this necessity to ensure a speedy
restoration of services requires a significant level
of advance planning.
In order to effectively continue business after
a major incident is declared, a high degree of
preparation and back-up support (materials,
processes, systems and personnel) are needed to
be already in place, or planned, so that they can
be rapidly deployed, and so that the controlled
responsiveness can be exactly that - controlled.
I would encourage you discuss this with your
key personnel and put the necessary plans in
place if you do not have them. It could save you
unnecessary loss of business in the future.
David Rogers is a Director of Supply Chain
and Logistics Association of Australia.
IS YOUR SUPPLY
CHAIN RISK FREE?
HAVE YOU A
WHAT IS BCP?
MHD SUPPLY CHAIN SOLUTIONS — MARCH / APRIL 2016
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