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

YOU ARE ONLY AS RESILIENT AS YOUR WEAKEST LINK

Using ISO 22318 – Supply Chain Continuity Management

INTRODUCTION

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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

PD ISO/TS 22318: 2015

• WHERE IT CAME FROM

• WHAT IT IS

…………….. AND WHAT IT ISN’T.

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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

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• 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

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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

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• 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

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SCCM STRATEGIES

- KEY POINTS OF CLAUSE 6

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• 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

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• 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

IS IT WORKING?

Exercising and testing

PERFORMANCE EVALUATION

- KEY POINTS OF CLAUSE 8

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• 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.

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Remember you are only as resilient as the weakest

link in your critical supply chain

Thank you

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