Business continuity in the supply chain

With outsourcing now firmly on the agenda of so many organisations, business continuity in the supply chain is an additional challenge that has to be met. It’s not the same challenge as BC within the organisation, because visibility and transparency of a third-party’s BC management may not be readily available. The common pitfall is for example in accepting an outside supplier’s affirmation of having business continuity planning in place without making any further checks. Yet the smaller, leaner businesses supplying just one key product to an organisation are often themselves more exposed to incidents that the customers they supply. Knowing how to verify supplier BCM is critical.

The size of the problem is significant. The Business Continuity Institute found that “Where organisations insist on the supplier having a business continuity management plan … 18 percent are happy to rely on no more than a statement from the supplier. 27 percent ask only to read the supplier’s business continuity plans and a further 27 percent don’t know how the supplier’s plans are verified.” Business continuity in the supply chain means ensuring that purchasers buying from external suppliers know how to examine the supplier itself and not just the product or service being supplied. Where required, BCM also has a role in educating purchasers on the approach to be taken.

Business continuity in the supply chain also means extending BC approaches to the suppliers themselves when those suppliers are critical to the success of an organisation. Elementary gap analysis can go a long way be identifying any shortfalls between what a supplier considers to be sufficient business continuity planning, and what an organisation needs the same supplier to put in place. The same verification of the areas internal to a business need to be done with the external ones as well:  organization and governance, BIA, business continuity planning, awareness and training programs, event response, and crisis management procedures and documentation, among others.