Business Continuity: Supply Chain Resilience

Until relatively recently, business continuity management for most companies focused primarily on the risks associated with IT failure or the loss of a building. The increasing reliance upon outsourcing in a more global business environment, however, has pushed supply chain risks firmly onto the business continuity agenda.

For many organizations, the supply of raw materials, manufacturing processes, and product storage are now regularly outsourced. Even those functions that were traditionally considered in-house activities, such as finance, purchasing, internal auditing, HR and occupational health are now considered outsourceable activities. In this supply chain-reliant environment, the loss of just a single critical supplier can have a devastating impact on a company.

The nature of the supplier
Suppliers by their very nature can be more susceptible to incidents than the organisations which they supply. Often smaller, leaner, providing ‘just in time' services and in many cases supplying only a single product, these factors amplify the impact which a disruption can have.

It is often the case, particularly with niche suppliers, that their services are being used by a number of different companies. As such, any disruption can have a much more pronounced ripple effect, impacting on multiple organizations. A good example of this occurred during the fuel stoppages of 2001 in the UK, when the water industry suddenly became aware of how over-reliant it was on ICI at Runcorn which produced 70 percent of the chlorine used in water treatment.

An organization should also be fully aware of the risk posed by disruption to 2nd or 3rd tier suppliers in the supply chain to their ability to continue operating.

In the firing line
The threats to the supply chain are many and varied, as can be seen in the following diagram. The risks can vary from a natural disaster to political instability, to getting caught up in a company dispute.

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Disaster Prevention Story: Trade Show Canceled by Swine Flu Scare

Okay, the potential for a swine flu pandemic is hitting close to home. One of my business associates was due to travel to Dallas TX this week for a trade show. Not now, the event was cancelled. 

The Food Marketing Institute (FMI) issued the following statement from Leslie G. Sarasin, president and chief executive officer, regarding today's decision to postpone the Future Connect leadership development conference scheduled for May 4-6 and the MARKETECHNICS® technology event May 5-8, in Dallas, TX.

"It is with a deep regret that, due to the recent influenza outbreak, I share FMI's decision to postpone our Future Connect and MARKETECHNICS® events, which were scheduled to occur next week in Dallas."

"The increased urgency of the alerts from health officials today and the guidance of the Centers for Disease Control and Prevention and the Dallas County Department of Health and Human Services confirmed our decision to not host a large gathering where attendees would be in close proximity. We seek to support their recommended precautions and prevention steps and would not want to contribute to spread of the virus in any way."

"We agonized over this difficult and critical decision, but are certain that the number one priority of America's food retailers, wholesalers and suppliers right now is to look out for the health and safety of their customers, employees and the communities they serve across the country and around the globe."

"In particular, we recognize that Future Connect is a program about leadership, and at this time our industry's leaders must be in their communities actively engaged in a time of potential crisis."

"FMI is focused on assisting our members in their efforts to communicate with consumers about the influenza outbreak. Consumer information is available on our website at: www.fmi.org."

"We are evaluating our options for rescheduling these events and will look forward to sharing more details about the plans for holding these events in the near future."

In my opinion this was a cautious yet reasonable decision. You can imagine the damage that would have been done had this press release read, "hundreds contract swine flu at Dallas food retailers conference...". This was a potential disaster that was prevented with good decision making. Once the risk is reduced the event can go on, likely stronger than would have been possible in the current situation.

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In this issue

Business Continuity: Supply Chain Resilience

Trade Show Canceled by Swine Flu Scare

Business Continuity: The Pandemic (Human) Virus Threat

The Conficker (software) virus has been getting a lot of news coverage lately, including on this website. Conficker is tough to stop and is constantly mutating to protect itself. 

But perhaps you've seen in the news stories about the newly mutated swine virus in Mexico? The CDC says that the new strain contains gene sequences from North American and Eurasian swine flu, North American bird flu and North American human flu. Plus is transmits from human to human. Yikes! 

As of the time of this writing there have been more than 80 deaths in Mexico and several cases have been reported in the U.S. In Mexico City, one of the most populous cities in the world, the streets are empty. People are staying home from school and work to avoid personal contact and help contain the virus. 

Reporting from Washington -- Federal officials today (Sunday April 26th) declared a public health emergency involving human swine flu, warning Americans to prepare for widespread outbreaks now or in the future, yet urging them not to panic. 

In a briefing at the White House, the acting head of the Centers for Disease Control, Dr. Richard Besser, confirmed a 20th case of the flu, this one in Ohio. He said the government will likely find more cases -- and cases that are more severe than the relatively mild ones seen in the United States so far -- as it ramps up detection efforts.

The World Health Organization (WHO) is considering raising it's pandemic alert system to level 4 from level 3, a significant milestone. 

Could it happen where you are? What if your business were forced to shut down due to the threat of a (or realized) flu pandemic? How much would that downtime cost? Is your company prepared for that possibility? 

The unlikely, but certainly possible, scenario is where having a well researched and documented Business Continuity plan can really pay off. Creating this documentation is inexpensive compared to the lost productivity from a realized event. 

Here are some information and resources that can be used to protect against loss due to a pandemic...

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Disaster Recovery Story: Unusual Flood, Successful Recovery

How unforeseeable can a disaster be? For Tessco Technologies, located outside Baltimore Maryland there was little to fear. It was not in a flood zone, not in an earthquake zone and devastating hurricanes were more than hundred year events. 

But in the case of Tessco, a faulty fire hydrant was a major culprit. 

One outside its Hunt Valley data center failed spectacularly on October 12, 2002 and several hundred thousand gallons of water blasted through a concrete wall leaving the company's primary data center under several feet of water and left some 1400 hard drives and 400 SAN disks soaking wet and caked with mud and debris. 

The Importance of Planning and Preparing For Recovery 

Disasters can be averted with some foresight and planning. Look at Tessco. According to Hal Kuff, Manager, systems and networks, all data was backed up and the company moved into a backup data center, restored the data from tape backups, and was able to resume operations within a few hours. Eventually, the data restoration firm, Asset Recovery Technologies, was able to recover all data from most of the hard drives and the SAN units, but had not the backups been immediately available the company would have suffered an irreparable loss.

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In this issue

Business Continuity: The Pandemic (Human) Virus Threat

Unusual Flood, Successful Recovery