Supply chain complexity - top business continuity concern for automotive industry

A third (35%) of businesses in the manufacturing industry are extremely concerned about potential supply chain disruption according to research released by BSI, the business standards company and the Business Continuity Institute (BCI). More than three quarters of manufacturing firms (77%) report increasing supply chain complexity as the fastest growing risk in business continuity, with malicious attacks via the internet (68%) and increased regulatory scrutiny (58%) taking second and
third place.

Global sourcing across supply chains creates severe business continuity challenges for manufacturers with key industry being automotive. BSI’s business continuity management system helps companies across different sectors to manage distruption due to natural disasters, man-made disruption (conflicts) and a lack of resiliency in different countries.   

Risk exposure varies by sector. The proportion of supply chains exposed to elevated, high or severe risk of natural disaster is highest for the apparel (85.6%), automotive (53%) and aerospace (51%) sectors, all of which have a high proportion of manufacturing and raw material sourcing based in politically and geologically unstable regions.

While the relative risks differ, the key lesson for organizations to consider is their planning for potential disruption. For example, the automotive sector suffered heavily from the 2011 Japanese tsunami due to a global reliance on a single manufacturer of a particular pigment essential for metallic paint finishes. As a result of the disruption, production in the factory was halted for three months before normal operations resumed, causing long lasting effects across the automotive marketplace.

 

BSI’s top ten tips for business continuity planning

1. Identify critical business functions – Once critical business functions have been identified, it is possible to apply a methodical approach to the threats that are posed to them and implement the most effective plans.

2. Remember the seven ‘P’s needed to keep your business operational – Providers, performance, processes, people, premises, profile (your brand) and preparation. 

3. Understand and track past incidents with suppliers – Obtain global/country-level intelligence so you understand what factors may cause a supply chain disruption e.g. working conditions, natural disasters, and political unrest.

4. Assess and Understand Vulnerabilities and Weak Points – Conduct risk assessments to evaluate supplier capabilities to effectively adhere to your business continuity plans and requirements. 

5. Agree and document your plans – These should never just be hidden away in the mind of the top management.  Assess your ‘critical’ suppliers to make sure their business continuity plans fit with your objectives and are defined within your contract.

6. Make sure plans are communicated to key staff and suppliers – Equally, share them with other key stakeholders to boost their confidence in your ability to maintain ‘business as usual’. This is particularly important for small businesses or those working with suppliers / buyers for the first time.

7. Try your plans out – If possible include suppliers in your exercises and remember to test them not only in scenarios where there may be a physical risk, such as poor weather conditions making premises inaccessible, but people risks such as supply chain challenges and boardroom departures.

8. Expect the unexpected – While lean and efficient supply chains make good economic sense, unexpected events can have a significant impact on the operations and reputation of businesses.

9. Make sure your continuity plans are nimble and can evolve quickly – If your plans look the same as they did 10 years ago, then they probably won’t meet current requirements.  Organizations engaged in business continuity management will be actively learning from their internal audits, tests, management reviews and even from incidents themselves. 

10. Make sure you’re not just ‘box-ticking’ – Plans which get the tick against the ‘to do’ list but don’t actually reflect the organization’s strategy and objectives can lack credibility and are unlikely to succeed in the long-term. Instead, make sure your plans allow you to get back up and running in a way that aligns with your organization’s objectives.