How vulnerable is your business to your supply chain?

In times of disruption, changes in technology, ageing infrastructure, rapid depletion of natural resources and higher levels of societal volatility, risks have increased for the supply chain.

How often have you thought about the the impact a critical supplier may have on your business in the event of a serious business disruption?

Maybe you think about it a lot. Especially these days when there is more social unrest, labour strikes, loss of power and water services and economic conditions where business survival rates have rapidly declined.

A business continuity management system, even a relatively informal one, can help you mitigate against internal and external risks. Basically, a business continuity plan helps you to do risk evaluation, perform business impact analysis, develop business continuity strategies and develop and implement business continuity plans.

The fundamental aim of a business continuity plan is to help a company restore full operations in a timely and cost-effective way.

What sort of risks do you face in the supply chain? Risk could include disruptive events resulting from a fire, employee fraud, equipment breakdown, and explosion, a cyber attack, hacking, a computer virus, power outages, severe storms, waste water service interruption, a hazardous material incident or flooding.

In the supply chain some of the risks could include tier suppliers, import or export delays, logistics disruption or delays, political instability, product shrinkage during shipping, product tampering, production problems, suppliers going out of business, supplier quality breakdown or even supplier shortages (components, parts, materials).

These risks need to be identified for your business and prioritized. Then plans need to be made to put in controls that can mitigate or reduce the impact of these risks

If any of this concerns you and your supply chain, the main starting point is to get together with your team and discuss the potential risks in your business and develop a business continuity plan.

Often when starting out in developing business continuity management, you will probably need someone to help guide you through the process.

You may even require a critical supplier to prepare their own business continuity plan to mitigate your risk.

Whatever you plan to do, remember that business continuity doesn’t have a definite end but is a continuous process where you need to review your plans on a continual basis (at least annually).

Have you thought what would happen if your business came to an abrupt halt?

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Factories have burnt down to the ground in recent months. A small-scale food business was out of action for almost three months when gas exploded inside their premises. Societal unrest disrupts business operations. Cyber attacks bring businesses to their knees for extended periods. But what about rising risks in the supply chain? Depleting global natural resources are making some critical materials scarce.

How long can you afford to be out of business?

Days? Weeks? Months?

Yes, you can buy insurance for physical assets but for revenue loss if you want insurance it’s going to cost you a bomb.

We’re not talking here about a planned business outage such as when you have to move out of a shopping centre or industrial premises during refurbishment. What we are talking about is a sudden disruptive incident – a fire, a protracted strike, loss of a critical supplier or major damage because of an extreme climate event (such as the storm that hit businesses and a plant nursery on the West Rand of Johannesburg).

If you have read this far, you might wonder about things that could put your business out for an extended period. Where are you vulnerable? Where are your risks? Is there anything that keeps you awake at night? Or, are there things that worry you, but you soon forget about them and carry on thinking it will never happen to us?

It’s easy to get caught in the thick of thin things…

… which means you don’t pay attention to what could happen.

You’re focused on the here and now. “Please, don’t distract me I’ve got a business to run,” is what you tell those who come to you with advice about things like business continuity.

This one’s going to pass through your mind so let’s address it here and now. You’re probably thinking, “It’ll never happen to me.” Well, you could be right. The probability of business disruption in your type of business could be small.

But you won’t really know until you have done a risk assessment of your operations. And, if you do identify risks, you would need to carry out a business impact analysis.

Planning for business disruption puts your operations in a stronger position. If something goes wrong, you can minimise the damage of your revenue and profits being choked for a long period. Other benefits would include having a more resilient business operation better able to cope with unforeseen circumstances.

In this uncertain, disruptive environment, it pays to know what your risks are and having a plan to mitigate them in the event of serious and protracted business disruption.

About the author: Chesney Bradshaw

Chesney Bradshaw, (BA), MBA, is a business continuity specialist. Based in Johannesburg, South Africa, Bradshaw has held senior positions in industry, including for large manufacturers, and senior roles in sustainability. He has written more than 800 articles on a variety of topics such as innovation, business formation, operations management, sustainability, energy efficiency, finance and risk management. He is a lead auditor and implementer for the ISO business continuity and societal security management system.