Do your suppliers ever let you down?

Summary

The Business Continuity Institute has found that UK businesses, particularly in the manufacturing sector, are taking too many risks by not ensuring their suppliers are capable of meeting their obligations. The risks are primarily to revenue and reputation.

How reliable is your supply chain?

I ask this after reading the latest survey on Supply Chain Resilience by the BCI; which has just been published.

This year’s report built on that of last year and sought answers to  questions about how organisations tackled challenges with their supply chain. Last years’ report assessed the degree of disruption experienced by companies due to problems in their supply chain.

Key findings

The report is quite large so I’ll highlight a few of the key findings that are relevant to manufacturing companies.

According to the report, 73% of manufacturing respondents have implemented some form of Just In Time or lean manufacturing techniques. However, it also found that few have reviewed their suppliers’ Business Continuity Plans and a massive 73% have not validated that those plans work in practice.

This is despite the report also showing that, on average, respondents had at least five supply chain related disruptive incidents in the past year. 72% had at least one incident and several had over 52!

Bad weather topped the charts as the key cause of disruption in the supply chain, with 53% of respondents citing this as the cause. Next came unplanned IT and telecommunications outages and the failure of outsourced service provision.

An interesting finding was that whilst the global average of respondents in all sectors who reported a disruptive incident was 72%, for the UK this figure was 83%.

Conclusions

This report confirms that the practice of extending business continuity management to the supply chain is still in its infancy, but that this is changing rapidly. The good news is that current best practice in business continuity planning (as followed by my Business Continuity Planning Service) is showing clear benefits to those who follow it.

The take aways are clear:

• If you have a supply chain, you must include your suppliers in your business continuity arrangements and you must check they really are doing it.
• If you are part of somebody else’s supply chain, as maturity improves you can expect to be actively audited to prove that your business continuity plans have been tested and proven to work. Downloading templates from the ‘net as a way of getting a tick in the box will not work for much longer.

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