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Planning for Business ContinuityPlanning for Business Continuityto Ensure Supply Chainto Ensure Supply Chain
and Operation Continuityand Operation Continuity
Prepared byPrepared byVintcom TechnologyVintcom TechnologyMr. Tanusit SkunnawatMr. Tanusit Skunnawat
BCM ConsultantBCM Consultant
Agenda
•• IntroductionIntroduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain
Discontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME
Manufacturers• Q&A
Why BCM
• The changing nature of business– Increasing dependency on ICT– Increasing system interdependency– Increasing commercial complexity– Increasing technical complexity– Increasing expectations from customer– Increasing Threat
Global Risks
Economic• Oil price shock/energy crisis• US deficits/fall in US$• Chinese economic hard
landing• Fiscal crisis – demographic
shiftEnvironmental
• Climate change• Loss of fresh water services• Natural catastrophe –
storms, earthquake, flooding
Societal• Pandemics• Infectious and chronic
diseases in developing world• Liability regime
Technological• Breakdown of critical
information infrastructure (CII)
• Emergence of risk associate with technology
The 11 Greatest Supply Chain Disasters
Source:
The 11 Greatest Supply Chain Disasters (cont.)
Source:
SARS
Toyota Brake
Plant Fire
1997
UPS Labor Strike
1998
Sept. 11 Terrorist AttacksGM Labor
Strike
Taiwan Earthquake
1999 2000 2001 2002 2003
Philips Plant Fire
West Coast Ports
LockoutIraq War
Scandals: Enron,
Andersen, Worldcom
Ford-Firestone
Tire Recall
Blackouts US -
Europe
FMD UK
Ref: Adapted from Dr. Debra Elkins, General Motors
Quebec Ice Storm
2004 2005
Nor’Easter
Tsunami
Madrid Attack
London Attacks
Katrina
Ok. tornado - GM
High ConsequenceHigh Consequence--Low Probability DisruptionsLow Probability Disruptions
Ericsson Case
Threats to Company Profitability
• Business Discontinuity– Loss of Revenue Lost Customers– Extra costs and expenses– Reputation
Agenda
• Introduction•• Present & Future Trend in SCMPresent & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain
Discontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME
Manufacturers• Q&A
Supply Chain Management
““Supply Chain Management encompasses Supply Chain Management encompasses ““the the planning and management of all activities planning and management of all activities involved in sourcing and procurementinvolved in sourcing and procurement,,conversionconversion,, and all Logistics Management and all Logistics Management activitiesactivities.. ImportantlyImportantly,, it also includes it also includes coordination and collaboration with channel coordination and collaboration with channel partnerspartners,, which can be supplierswhich can be suppliers,,intermediariesintermediaries,, thirdthird--party service providersparty service providers,,and customersand customers.. In essenceIn essence,, Supply Chain Supply Chain Management integrates supply and demand Management integrates supply and demand management within and across companiesmanagement within and across companies..””
Opportunities & Threats
• Shorter product life cycles
• Customization
• Globalization• Outsourcing
Longer chains, more parties involved, tougher
competitors:
Tougher supply chainmanagement
More product introductions and
products for unfaithfulcustomers:
Tougher competition
Information Technology: A Supply Chain Enabler
• Information links all aspects of supply chain
• E-business– replacement of physical
business processes with electronic ones
• Electronic data interchange (EDI)– a computer-to-computer
exchange of business documents
• Bar code and point-of-sale– data creates an
instantaneous computer record of a sale
• Radio frequency identification (RFID)– technology can send
product data from an item to a reader via radio waves
• Internet– allows companies to
communicate with suppliers, customers, shippers and other businesses around the world, instantaneously
BuildBuild--toto--order cars over order cars over the Internetthe Internet
Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
• Customer sales
• Production
• Distribution
• Customer relationship
• Customer sales
• Production
• Distribution
• Customer relationship
• Push—sell from inventory stock
• Goal of even and stable production
• Mass approach
• Dealer-owned
EE--AutomotiveAutomotive
E-automotive Supply Chain
• Pull—build-to-order
• Focus on customer demand, respond with supply chain flexibility
• Fast, reliable, and customized to get cars to specific customer location
• Shared by dealers and manufacturers
AutomotiveAutomotivePastPast
Supply ChainSupply ChainProcessesProcesses
Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
• Managing uncertainty
• Procurement
• Product design
• Managing uncertainty
• Procurement
• Product design
• Large car inventory at dealers
• Batch-oriented; dealers order based on allocations
• Complex products don’t match customer needs
E-automotive Supply Chain (cont.)
• Small inventories with shared information and strategically placed parts inventories
• Orders made in real time based on available-to-promise information
• Simplified products based on better information about what customers want
EE--AutomotiveAutomotiveAutomotiveAutomotivePastPast
Supply ChainSupply ChainProcessesProcesses
Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
Source: Adapted from Garrison Wieland for “Wal-Mart’s Supply Chain,” Harvard Business Review 70(2; March–April
1992), pp. 60–71.
Relationship between Facilities and Functions along the Wal-Mart Supply Chain
Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
Amazon.com
Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
A WMSSource: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
•RFID technology will facilitate more efficient and timely tracking of goods throughout the entire supply chain
RFID in the Supply Chain
Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)
Agenda
• Introduction• Present & Future Trend in SCM•• Mapping BCM with SCOR ModelMapping BCM with SCOR Model• Identifying Sources of Supply Chain
Discontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME
Manufacturers• Q&A
SCOR -5 distinct Management Processes
Supplier
Plan
Customer Customer’sCustomer
Suppliers’Supplier
Deliver SourceMakeMake DeliverMakeSourceDeliver
Internal or External Internal or External
Your Company
Source
SCOR Model
Return Return ReturnReturn Return
Return Return
Building Block Approach
SourceReturn
Deliver
Best Practice Features
MetricsProcesses
SCOR Model Processes
PlanDevelop a course of action that best meets sourcing, production and delivery requirements
SourceProcure goodsand services tomeet plannedor actualdemand
MakeTransformproduct to a finished state to meet planned or actualdemand
DeliverProvide products to meet demand, including ordermanagement, transportation and distribution
ReturnReturnproducts,post-deliverycustomersupport
Performance Management- SCOR metrics impact on Income Statement -
Source: iCognitive
Performance Management- SCOR metrics impact on Balance Sheet -
Source: iCognitive
3. Continuity Strategies:Determining the selection of
alternative strategies available to mitigate loss,….
6. Exercise & Plan Maintenance:Ongoing plan testing, audit and change management of the BCP and its processes
2. Understanding your business:Business Impact and risk assessment tools are used to identify the critical deliverables and enablers in your business,….
2. Understanding your business:Business Impact and risk assessment tools are used to identify the critical deliverables and enablers in your business,….
6 Steps BCI GPG
11
55 44
33
22
66
4. Developing the Response:Improving the risk profile through
improvements to operational procedures and practices, ….
5. Establishing the Continuity Culture:Introduction of the BCM process by education and awareness of all stakeholders, ….
1. BCM Policy & Program Management
Risk Assessment / Business Impact AnalysisRisk Assessment / Business Impact AnalysisMTPD, RTO,RPOMTPD, RTO,RPO
RTO/RPO Justification
Agenda
• Introduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model•• Identifying Sources of Supply Chain Identifying Sources of Supply Chain
DiscontinuityDiscontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME
Manufacturers• Q&A
Risk Identification
Vulnerability / Risk Map
Source: MITSloan MR: A Supply Chain View of the Resilient Enterprise
Possible Areas of Threat to ICT
• Human Error• Application Failure• Network & Telecom Failure• Information Security Threat – Virus, Worm,
etc.• Power Outage• Etc.
Other Critical Areas
• Wide Area Disruption– Fire Blackout– Earthquake– Terrorism– Etc.
• Pandemic Flue•• 33rdrd Party Services Disruption Party Services Disruption BCM for BCM for
the whole value chainthe whole value chain
Agenda
• Introduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain
Discontinuity•• Key Concept of GPG of BCIKey Concept of GPG of BCI• Examples of Crisis Management for SME
Manufacturers• Q&A
The Business Continuity Institute
• Established in 1994• Introduced 6 steps Good Practice Guideline
(GPG) in year 2002, current version 2008• Mission Statement of the BCI :
Promote the art and science of business continuity management
A Unifying Process
3. Continuity Strategies:Determining the selection of
alternative strategies available to mitigate loss,….
6. Exercise & Plan Maintenance:Ongoing plan testing, audit and change management of the BCP and its processes
2. Understanding your business:Business Impact and risk assessment tools are used to identify the critical deliverables and enablers in your business,….
6 Steps BCI GPG
11
55 44
33
22
66
4. Developing the Response:Improving the risk profile through
improvements to operational procedures and practices, ….
5. Establishing the Continuity Culture:Introduction of the BCM process by education and awareness of all stakeholders, ….
1. BCM Policy & Program Management
Understand Organization
IdentifyMTPD
For eachProduct or
Service
Scope and Context of BCM
• Approved Budget and Top Management Support
• Formal Disaster Authorities• Emergency Response, Incident Management
System, and Business Recovery• Embedded BCM
What is Business Continuity Planning
Planning to ensure the continuation of operations in the event of a catastrophic event. Business continuity planning goes beyond disaster recovery planning to include the actions to be taken, resources required, and procedures to be followed to ensure the continued availability of essential services, programs, and operations in the event of unexpected interruptions.
Move toAlternate
SiteReturnHome
ResumeBusiness
Data Synchronization
Restore Technology Capability
Restore Communications
Restore Business Functions
NotificationsVital Records
Lost Data
(Data) Recovery Point Objective
Recovery Time Objective
(If necessary)
RTO/RPO Concepts
The Impact of an Incident
Maximum Tolerable Period of Disruption
Phases of Recovery
BCM to Reduce Guesswork
Timeline
Agenda
• Introduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain
Discontinuity• Key Concept of GPG of BCI•• Examples of Crisis Management for SME Examples of Crisis Management for SME
ManufacturersManufacturers• Q&A
Example Checklists for SME Manufacturers
1. Is the vendor a single or sole source supplier?2. Which product(s) or service(s) does the vendor support and
what percentage of revenue/earnings do they address? 3. How close is the vendor to your production facility? Will a
local or regional disaster affect both you and the vendor and impact recoverability?
4. How often is the vendor's product delivered (if applicable)?5. What is the average on-site inventory level of the vendor's
product (if applicable)?6. How long does it take to order and take delivery of the
vendor's product?7. Does the vendor employ unique production processes and
capabilities where an alternate vendor would be difficult to find?
Risky Business -Failing to Assess Supply Chain Continuityby Michael Porier & Brian Zawada
Recommendations
• Maintaining safety stock • Monitoring transportation entities and planning for
contingent shipping arrangements • Observing product transportation paths, looking for
potential bottlenecks • Developing plans to allow for acceleration of
shipments • Implementing a crisis communications process with
key vendors • Developing continuity plans to address in-house
product receipt, inventory management and product shipment processes, with an emphasis on labor interruption and other single points of failure
Risky Business -Failing to Assess Supply Chain Continuityby Michael Porier & Brian Zawada
• Established in 2000 • Vision:
– To be the preferred Business Continuity Management (BCM) partner in Asia
– To be one of the leading organizations, to set the BCM direction, providing quality and total BCM solutions for organizations in Asia
Business Continuity Planning Asia Pte., Ltd.
• Services– Training, Coaching, and Consulting
• Symantec– Business Continuity
• Disaster Recovery• High Availability
– Security– Information Risk & Compliance– Storage– Infrastructure Operations
• Network Infrastructure– Optical Transport for Storage & Server– Out of Band Management for Remote Site– Free Space Optic for Fast Restoration– WAN Optimization
Vintcom Business Continuity Solutions
Thank you & Questions ?Vintcom Technology Co., LtdVintcom Technology Co., Ltd.Tel: 02-636-8272 ext: [email protected]