Risky Business (Part 3): A Supply Chain Continuity Case Study

Risky Business - Supply ChainMuda. It’s the Japanese word for waste and the enemy in modern supply chain management and manufacturing. Since the 1980s, lean thinking has revolutionized the way businesses operate by seeking to eliminate muda and free capital held in wasteful assets—that is, assets that do not add value to the overall process (e.g. excess inventory or underutilized equipment). Lean thinking is important and helps businesses to improve their processes and their bottom lines. It does however beg one key question that risk managers and business continuity professionals must ask: “how lean is too lean?” Wantonly cutting out all perceived muda to save money can actually have the opposite effect down the road. Organizations with global supply chains inherit significant risk due to the potential impact associated with a supply chain disruption.  In some cases, a disruption could threaten an organization’s ability to continue business or require large amounts of capital to recover. Organizations must fully examine their processes and supply chains to identify risk and make informed decisions on how lean is too lean.

This perspective—the third in the Risky Business Series—leverages a case study of the recent west coast dock worker strike to demonstrate the inherit risk of a supply chain that is too lean due to a virtual monopoly. This article also revisits evaluation and mitigation strategies from the first two Risky Business perspectives that organizations can use to reduce risk to an acceptable level. Continue reading

FFIEC Updates Business Continuity Planning Booklet with Appendix J

FFIEC_Appendix_JAppendix J: Strengthening the Resilience of Outsourced Technology Services

The Federal Financial Institutions Examination Council (FFIEC) recently released an updated a version of its Business Continuity Booklet, which is one in the series of booklets that comprise the larger Information Technology (IT) Examination Handbook.

This article provides an overview of Appendix J and discusses the confirmed importance that continuity planning isn’t limited to just your organization; rather, it extends to all outsourced and supplier relationships as well. Continue reading

Risky Business (Part 2): Too Lean, Too Late

Risky Business - Supply ChainMany organizations today aim to make operations as lean as possible. But, in doing so, are these organizations unknowingly increasing the risk of operational downtime and excess cost? Due to streamlining operations and eliminating redundant activities or suppliers, one misstep or disruption (either internally or externally), can result in time-consuming and costly operational delays, or much worse, impact market positioning or even threaten the survival of the organization.

This perspective is part two of a supply chain risk management-focused series called “Risky Business”. In part one, Managing Third-Party and Supplier Risk, we discussed the importance of protecting your organization from risks associated with a dependence on suppliers (and service providers), as well as how to analyze potential impacts and prioritize these risks.

In this perspective we’ll discuss the specific business continuity strategies and risk treatment options available to mitigate the risk associated with supplier dependencies to an acceptable level. Continue reading

Risky Business (Part 1): Managing Third-Party and Supplier Risk

Business continuity planning is inherently cross-functional with a necessity to address risks to an organization’s product and service offerings, as well as the resources necessary to meet obligations.  As organizations increasingly rely on a global network of suppliers and service providers, business continuity practitioners have the responsibility to understand and analyze these relationships and lead strategy identification efforts to protect their organization when faced with a third-party disruption.

Developing and implementing business continuity strategies and risk treatment options related to third parties can be a difficult endeavor because strategies may seemingly contradict an organization’s strategic efforts to leverage single-source suppliers, make supply chains “lean”, and reduce stored inventory levels. However, business continuity practitioners must provide top management with the information needed to balance strategic initiatives with the need to reduce single points of failure and protect an organization should a resource become unavailable.

This perspective discusses the tools available to identify and document third-party resources and methods by which risks can be presented to top management for review and action. Continue reading

Great Ideas: The Top Five Questions to Ask Your Critical Suppliers

QuestionsAs Published in the March/April 2010 Issue of Continuity Insights Magazine

It seems as though a growing number of organizations are finally getting around to assessing their critical suppliers’ business continuity capabilities.

The most common approach used to perform this activity is a survey. Unfortunately, surveys often go unanswered, especially long ones. And in many cases, survey questions are written in such a way as to be open to interpretation.

Considering ever-present time and resource constraints, it is essential that surveys – or even interviews – be streamlined. And here’s how to do just that. Continue reading

Managing Expanding Supply Chain Risks

Supply ChainAs has been confirmed by the events of the last year, risks to an organization can come from any number of often unpredictable sources, and can result in an impact far more serious and long-lasting than anyone would have imagined.  Relationships that up to now have been assumed to be secure, from banking relationships to the stability of a country’s financial system, have been called into question. Continue reading