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Lessons Learned:
Supply Chain Management
Stephen Nuttall, MBCI
Some Context: My Background Roles:
Independent auditor for business processes & business continuityCertified lead ISO22301 AuditorBusiness Operations Manager – Hewlett-Packard Continuity ServicesBusiness Process Review – Department of HealthMinisterial support DWP - Whitehall
Key Issues:Organisations dependent on supply chains in all business areasCritical supplier for many clientsExpected to minimise costs as a supplierWant suppliers to deliver at minimal cost
The Issue……
“We cannot demonstrate that we can carry on our business during or after a major disruption unless we know our key suppliers will be there with us…..”
THE Supply Chain: May look complex….But only because it is….!Flow and Volume of Input
Control of Output
Interconnection of variousBusiness Functions
Susceptible to Overloading
Prone to Breakdown
Demands specialist care
OK: Your Turn…..!
Q – Who are your key suppliers?Q – How do you include them in your BC plans?
Who Are Key Suppliers?
Anyone on whom we depend as part of our critical supply chain
How best to include suppliers in YOUR plans?
OK: Let’s look at this one bit at a time….
Look At Their BCM - Why?
Modern business uses multiple suppliers and contractors
We aim for “just-in-time” deliveries We depend on multiple organisation supply
chains Our most important services may be delivered
by others Customers do not differentiate between us and
our suppliers.......
How Easily Can I See The Supplier’s BCP?
Depends on:o How Important Are We To The Supplier?o What sort of relationship do we have?o Will it hurt THEM if we fail?o Can they legally share their plans?
YOU have a right, (morally, if nothing else…..) to know what they plan
Do they trust YOU? What does the contract say?
Things You Should Ask Do you have a BCP? (!) What standards are they developed to? What is your target level of service? What is your basis for plan development (eg, BIA, TA, etc?) What is your strategy for BCM delivery? Do you have a Crisis Management Plan? How often do you exercise it? Is it externally audited? What events are covered? Do you have single points of failure? Staff awareness training provided? Do you provide a guaranteed level of service?(See also 3PQ Questionnaire: http://www.continuityforum.org/content/3pq-business-continuity-project-page )
Things I Shouldn’t Tell You….
Do I trust the supplier? Will it hurt them more than me if they let me
down? Do I trust the supplier? Where am I in the “pecking-order” of their
customers? Do I trust the supplier? Do they demonstrate the right culture? Do I REALLY trust them…..?
It's a very sobering feeling to be up in space and realize that one's safety factor was determined by the lowest bidder on a government contract.
Alan Shepard
Some lessons we learned on the way(some came the hard way......!)
Outcomes are the ONLY thing which ultimately matter to you and your clients
Are you as important to your suppliers as they are to you? The best procedures in the world only produce the result you planned. Have
you got the right plan? Cutting costs is easy – keeping value is hard Don’t be frightened of challenging experts – even on their own territory -
Experts often have more data than judgment Standard processes are both great and deadly.....
ITSCM Leaders Meeting 22 February 2012Supply Chain Strategies that work:
And a few of those that don’t.........
Could do better....? Eyes wide shut What the auditor saw.......
“Tick-box” supply chain check“Have you got ISO22301?”“Can we see your BC plans?” (Maybe not.....!)Over-prescription of the solutionFailing to prioritise different areas of the supply chainNot balancing risk with value. (Remember, you can have any two of these, but not all three: Cheap, Quick, Thorough)
Hugely impressive documentation which proves nothing. (Management by weight!)
OR, put another way,.... A failure to use common sense......
Managing your incoming supply chain I’ve seen quite a few: this is an example from manufacturing
WHO owns the risk.....?And we are paid to do what exactly....?Identify the criticality of the supplierIdentify the impact of non-supply, (or delayed/restricted supply)Identify options for alternates and “crank-up” timesAgree a level of audit/validation matching the criticality and risk for the supplier
Focus on desired outcomes when validating the plansCan we share the incentives?Can we share the pain?How much do they want our business?
When you are part of the supply chain This example is from an Outsourcing services organisation
Provide a clear statement of work that demonstrates compliance to the contract
Make absolutely clear what we are agreeing to achieve (and what we aren’t agreeing to!)
Focus on the outcomes we will achieve and how we will do itClarify the dependencies and assumptionsDemonstrate that we can achieve exactly what we said we would
Provide an auditable trail of how we achieved it and will continue to achieve
Q – What does a successful supply-chain management process/plan look like?
Summary – what have we (I) learned? Supply chains aren’t always (ever?) easy Focus on the outcomes you need to achieve Be collaborative & supportive Be clear to suppliers on what they must do & how they will be measured Understand and accept the limitations and plan for them Choose which battles you want to fight – and which can wait Don’t be frightened of upsetting people – but don’t do it gratuitously
This is your business: never forget that your suppliers can harm KILL it!
And a final thought….
God grant me the Serenity to accept the things I Cannot change
The courage to change the things I canAnd the wisdom to know the
difference…
Anything Else?
Have a safe journey home......!
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