5 minute read 10 Jun 2022

Leveraging supply chain business continuity planning in a disruptive environment

Authors
Tom Van Herzele

EY Belgium Supply Chain & Operations Executive Director

Consultant at heart – passionate about building a better working world – hobby chef and golfer.

Loraine Mesa

EY Belgium Supply Chain & Operations Manager

Supply Chain professional. Digital Supply Chain, Manufacturing Operational Excellence, Smart Factory.

5 minute read 10 Jun 2022

As global disruptions are impacting supply chains as a whole, supply chain resilience is key to mitigate exposure to threats.

This article is part one of a two-part series where we discuss disruption, business continuity and viable strategic solutions. Read the other part here: Moving from visibility of the supply chain towards visibility of the supply chain network.

In brief

  • The high degree of integration within the global economy causes disruptive events to propagate across countries and industries.
  • Innovative leaders have a cautious vison of how extensive business continuity planning could protect their key operations.
  • 5 stages of Business Continuity Planning include building a strong foundation, assessing risk, effective communication, clear roles & responsibilities and testing and maintaining the plan.

Supply chain disruptions are inevitable. Over the past 15 years, different economic and geopolitical events have disrupted the global economy and society. Restrictive trade measures have increased almost threefold since 2017 with the Covid-19 crisis and the Russia – Ukraine conflict being the latest culprits. Disruptions, regardless of their origin, call for significantly increased resilience in supply chain management. It is therefore vital for companies to implement flexible business models that can thoroughly withstand disruptive events. 

The high degree of integration within the global economy causes disruptive events to propagate across countries and industries, affecting global supply chains as a whole.

Major risks and disruptions closer to home

A survey ran across many European companies identified risks and challenges across their supply chain networks. These include shortages to raw materials and the consequent increase in prices with a long term impact, personnel mobility limitations, inflation, logistics delays and an overall lack of preparedness for disruptions.

European economies are largely dependent on imports of energy commodities, fertilizers, iron and other metals. Companies involved in the manufacturing industry, mainly in the food industry, logistics and agriculture which deal with Russia directly are more sensitive to sanctions and shortages to supplies.

Visionary leaders use Business Continuity Planning to make their organizations flourish 

Resilient companies use disruption as a launching pad for growth and innovation while introducing new ways of working. Innovative leaders have a cautious vison of how extensive business continuity planning could do to protect their key operations.

It’s imperative to ask the right questions about the systems, tools and plans that are required to continue operating and meet market demands. Key insights into historical data and emerging trends assist in rapid detection, response and recovery from disruptions. Leadership decision making should support in designing the resilient supply chain.

Recovery after a disruption requires a structured and well communicated process ideally mapped in advance. Key attributes in a business continuity plan are guided by the ISO 22318 technical specification. In order to achieve a robust plan, what exactly should be included?

  • 1. Build a strong foundation

    A business continuity plan helps in identifying both internal (network outages, system hacks, supply chain disruptions and management issues) and external risks (natural disasters and civil unrest) faced by the organization. The plan estimates the risk level, potential consequences of each risk and impact on business continuing normally. Conducting a business impact assessment helps identify critical areas prone to disruption and quantify the effects of not addressing risk. Senior leadership should outline the goals and objectives of the business continuity plan to guide the organisation when disruption occurs, keeping key operations running.

  • 2. Conduct a risk assessment

    For each risk there should be a detailed response with required actions, assigned resources and people required to restore operations and production back to acceptable levels. In some instances production will need to be moved to other locations, systems restored and identification of key employees to resume work. All functions are categorized according to criticality, focusing on continuity efforts first.

  • 3. Assign roles and responsibilities

    Resilience is dependent upon stakeholders required to respond to any disruption. The business continuity plan assigns human resources with clear responsibilities, roles and actions for each operating location. To maintain critical business operations related to business continuity, required skill sets and personnel should be identified and their availability prioritized. The assigned resources are trained in their respective roles and actively participate in testing the plan.

  • 4. Draft a communication plan

    A communication plan is essential to ensure all stakeholders are aware of their duties, and allows communication from one centre of command. In any event, communication with stakeholders, suppliers, customers and employees is key to support critical operations. It is necessary for the organisation to list key contacts, from suppliers to internal resources, to be contacted in case of crisis. The communication plan details any media briefings and press releases in compliance with the organizations’ communication guidelines.

  • 5. Test and maintain the plan

    For the plan to work it should be tested regularly to ensure the team is able to fulfill their responsibilities and duties . The outcome of the test will identify loopholes and areas of improvement, which is used in updating the plan and re-training resources.  Testing will confirm business continuity objectives are met and align with the strategy. Virtual testing scenarios can be developed to create more realistic scenarios and gauge the level of response in line with expectations.

Disrupt before being disrupted – from resistance to implementation 

There are numerous options for your organization at several stages of disruption, pre-disruption, during disruption and post disruption. The traditional supply chain operating model will need to be modified to suit the new narrative. As a leader it’s important to identify vulnerable and redundant areas within your supply chain, and their impact on business continuity and your value chain. This can be achieved by conducting a risk assessment on your sustainability measures, geography of key suppliers, underutilized data and analytics and supplier monopoly.

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Summary

As global disruptions are impacting supply chains as a whole, supply chain resilience is key to mitigate exposure to threats. Innovative leaders have a cautious vison of how extensive business continuity planning could protect their key operations. Discover the five stages of a successful Business Continuity Planning.

About this article

Authors
Tom Van Herzele

EY Belgium Supply Chain & Operations Executive Director

Consultant at heart – passionate about building a better working world – hobby chef and golfer.

Loraine Mesa

EY Belgium Supply Chain & Operations Manager

Supply Chain professional. Digital Supply Chain, Manufacturing Operational Excellence, Smart Factory.