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| Lee Glendon CBCI Head of Research and Advocacy |
In the BCI’s report Horizon Scan 2013, one of the key trends
of concern identified by Business Continuity professionals was “increasing
supply chain complexity”. So on Tuesday 19th March, the BCI
and the Chartered Institute of Purchasing & Supply (CIPS) convened a
roundtable of senior supply chain, risk and business continuity practitioners
from sectors as diverse as retail, manufacturing, energy, housing, construction
and telecommunications to share experiences and discuss how they were dealing
with the challenge.
If folk were hoping that complexity is something that will
stop or slowly unwind, then they would not have got much comfort from the
discussion.
Perhaps, the most important driver of complexity is the
customer and the desire of businesses to develop the right supply chain to meet
the needs of the customer. For example, the supply chain required to be
able to sell a product as “made in Italy” sets its own restrictions and risks
that need to be managed.
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| BCAW Roundtable Discussion 2013 |
Many of the drivers of complexity have come about through
conscious business decisions. A number of organisations had decided to
consolidate their tier one suppliers – while this simplifies the number of
interfaces at tier one, what is has done has created many more tiers below the
immediate supplier, reducing visibility. Participants noted that they
were now experiencing disruption originating at tiers five and even six!
Another issue raised by a number of people was around the
illusion of diversity that dual-sourcing can bring. While many had
introduced dual-sourcing in terms of immediate suppliers, some had found to
their cost that at tier two or three they were reliant on a single supplier
again. This point opened up a wider discussion about how difficult it was
to understand interdependencies between suppliers and that the term supply
chain should perhaps be replaced by ‘supply chain networks’.
Some sectors were suffering from lack of communication
around changes in their extended supply chain. More than one participant
commented that their suppliers would change the location of production or the
people providing a service without informing them, so organisations would be
caught out in finding that an event, for example industrial action, in one
country affected them, even though they didn’t think they had any exposure to
the event.
Representatives from the public sector provided an
interesting contrast to their colleagues in the private sector. Their
driver of complexity was government policy which was requiring not supplier
consolidation but increasing their spend with small and medium sized
businesses, while this was sometimes managed through a large tier one supplier,
there was a need to monitor the success of this policy and provide extensive
training and development support for small businesses to work with government
entities.
The consequences of redrawing the boundaries of
organisations over many years through outsourcing were also flagged as creating
challenges in that the suppliers often had more knowledge and expertise than
the client. Some felt that too much intellectual power had been outsourced and
one organisation stated that they were now bringing back in-house some of the
higher skilled activities.
In concluding this part of the roundtable discussion, it’s
much clearer why complexity is such a taxing trend for Business Continuity
professionals and why it is so important to find an approach to manage it
effectively.
In Part 2 of this roundtable report, we’ll look at some of
the techniques that are being used to manage complexity.
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