End of year deadlines and festivities mean that maximum tolerable outage is an increasingly hot topic in many sectors. But what will expectations be for the year to come? MTO in itself is a measurement, a tool to be used in delivering business continuity overall. Changes in MTO, whether in terms of level or application, are driven by the business requirements of the organization, which in turn are defined by customer needs and demands. Now that the fear factor of the natural disasters of 2011 has subsided, there is a trend for customers to become ever more demanding in terms of delivery and flexibility of supply. There are then at least two possible effects on MTO.
To see how pressure exerted by customers can change an organisation’s perspective about MTO, let’s follow the connections from the market back to the enterprise. The first possible effect on a business is the segmentation of the supply chain: in effect, mini supply chains within the same company, each one serving a different customer segment. Will such internal, but distinct supply chains all use the same figures for maximum tolerable outage? Will companies be better off applying one value (the lowest MTO) for all, or managing a set of different, individually adapted MTOs? Expect spread-sheet models of risk and cost to multiply accordingly too.
Secondly, sectors like chemicals, life sciences, and pharmaceuticals are moving towards intelligent supply chain solutions, where different entities share overall capacity dynamically. Is one entity’s maximum tolerable outage the same as another’s? If one company wants lower MTO when another can tolerate a higher MTO, should the first company shoulder more of the expense of operating the joint supply chain? As business requirements grow more complex in the face of changing customer demands, so do business continuity strategies and the way they define and use MTO.