The performance and reliability of supply chains and related continuity considerations have been highlighted by the impacts of the COVID-19 pandemic, recent inflation, international turmoil, and logistical challenges. News reports of dozens of supply ships anchored outside Los Angeles harbor waiting to off-load their cargoes, along with stories of chronic supply shortages, have been frequently in the headlines in recent months. Furthermore, increases in gas prices at the fuel pump can be attributed partly to supply issues and are further exacerbated by inflation. Consequently, mitigating supply chain disruptions and their impacts have increasingly become a top priority for both business and government.
The integrity of global supply chains is crucial to most organizations, whether they are buying or selling products and services. Understanding how supply chains are organized, identifying risks and vulnerabilities, and preventing disruptions to supply chains are essential considerations to achieving supply chain resilience. Supply chains need to be protected from unplanned incidents that could disrupt or damage them. This is where supply chain resilience initiatives, including business continuity, technology disaster recovery, risk management and incident management become important business priorities.
Business continuity (BC), disaster recovery (DR), risk management (RM) and incident management (IM) activities are well-defined and governed by domestic and international standards and good practices. Applying these principles and practices to supply chains is fast becoming an important business activity.
Supply chain resilience incorporates several fundamental actions:
- supply chain impact analysis,
- supply chain risk assessment,
- prevention and recovery strategy development,
- supply chain BC/DR/IM plan development,
- plan exercising,
- awareness and training,
- plan/program maintenance, and
- program monitoring, audit and continuous improvement.
These activities must be optimized to address the relevant issues associated with supply chains.
One of the most important global standards for supply chain resilience was issued by the International Organization for Standardization (www.iso.org), ISO 22318:2022, Security and resilience – Business continuity management systems – Guidelines for supply chain continuity management. Formally approved by the ISO in February, 2022, this standard provides useful planning and implementation guidance on increasing supply chain resilience. It is critical that organizations understand how to implement these standards to minimize operational risk.
In a perfect world, supply chain resilience activities should touch all members of an organization’s supply chain, both upstream and downstream. It is vital that entities identify and understand the elements of their supply chains that are most important and those that are most vulnerable to disruption. These elements can be determined through a supply chain impact analysis (SCIA), which is similar to a business impact analysis (BIA), plus a risk analysis of supply chain threats and potential vulnerabilities that could occur.
Organizations should, therefore, verify that critical members of their supply chain(s) have actionable BC/DR plans. By being proactive on supply chain resilience, organizations can avoid costly disruptions and minimize adverse supply chain impacts during challenging periods.
Please contact BDA Global’s business resilience team at info@bdaglobal.com for more information.