Are You Prepared to Address Significant Business Continuity Challenges?

By Bill Donohue, Interim Executive Director, GENEDGE Alliance

Many companies began to consider the impact of disruptions to their supply chains shortly after the Great East Japan Earthquake (GEJE) and Tsunami event occurred.  The GEJE caused significant disruptions to global supply chains for electronics and automotive business sectors.  In total, the event caused a GDP disruption in Japan that was equal to roughly two-thirds of the magnitude of the great recession, (itself triggered by the collapse of Lehman Brothers in the fall of 2008).  Not only were Japanese based automotive and electronics companies affected, but in some cases, key materials such as paint pigments for automotive applications affected every automotive company across the globe.

The spread of global supply chains to far reaching corners of the globe was accelerated by the invention of the metal shipping container in 1956 by Malcolm McLean, a native of North Carolina.  This led to the rapid development of highly productive freight loading and unloading methods, creating a new industry called the intermodal cargo transport business.  By replacing the traditional break bulk method of shipping dry goods, manufacturers, wholesalers, distributors and merchants were able to gain the advantage of low cost labor, through safe, secure acquisition of bulk purchases of commodity raw, intermediate and finished good materials.  As ports and rail systems advanced their facilities to take advantage of these new methods, companies began to import and export ever greater volumes of products.  As a result, supply chains that were once based on local or near shore strategies increasingly focused on lowest purchase price sources.

Many companies ignored the risks associated with such strategies and found themselves exposed to disruptions that occur as a result of any number of events, triggering the loss of supply.

A discipline called Business Continuity Planning was developed and codified by the British Standards Institute (BSI) in 2006.  Business continuity planning (BCP) “identifies an organization’s exposure to internal and external threats and synthesizes hard and soft assets to provide effective prevention and recovery for the organization, while maintaining competitive advantage and value system integrity”.   A business continuity plan is a roadmap for continuing operations under adverse conditions such as a storm or a crime.  In the US, governmental entities refer to the process as continuity of operations planning (COOP).

Any event that could impact operations is included, such as supply chain interruption, loss of or damage to critical infrastructure (major machinery or computing/network resource).   As such, risk management must be incorporated as part of BCP.

Most recently, BCP has been codified by the International Standards Organization (ISO) as ISO 22301.

As part of the NIST-MEP Supply Chain Optimization program, offerings assist companies in developing supply chain risk management plans and business continuity plans.  These services are intended to help companies address exposure and build mitigation strategies to remain effective in the event of one or more disruption(s).

Bill Donohue, in addition to Interim Executive Director, is also the CEO for Virginia’s GENEDGE Alliance. The MEP affiliate is in its 21^st year of operation.  Bill leads a network of consulting project managers who are responsible for improving the competitiveness of companies in manufacturing, industrial, government, and not-for-profit organizations. Since 2000, GENEDGE impacts have surpassed $3 billion. Bill is particularly focused on establishing and refining strategic initiatives for clients that drive innovation, growth, and operational excellence throughout their value and supply chains. Contact Bill at bdonohue@genedge.org.

Photo courtesy of: AICPA Insights