The latest definitions of Business Continuity Planning (BCP) must be examined in the context of new economic, geopolitical and the myriad other disruptive pressures on the supply chain in 2023 and beyond.
In the new models for BCP, business continuity cannot be looked at as an isolated activity. It is best viewed as a widely collaborative endeavor engaging the right people across the enterprise to define the scope, objectives and goals of the BCP work. While collaborating, stakeholders become aligned and clear on objectives – with an equal handle on end-to-end perspectives from their respective function in the enterprise.
Within this current ever-changing environment, BCP should be viewed as an ongoing part of a firm’s strategy and supply chain design process, and enterprises should have a regular cadence for evaluating these processes. Enterprises must take a retrospective look at what worked and what did not work according to plan, lessons learned. Given those, they must then set expectations for preparedness – operational, tactical and strategic.
A key component of a business continuity plan is a disaster recovery plan that contains strategies for handling supply chain disruptions to suppliers, manufacturing assets, transportation lanes and even labor. The plan should not only formulate how to reestablish supply into the market; a more advanced version will have clear customer, channel and product priorities that align with the firm’s strategy and objectives.
In addition, consideration for a new “circular” value chain and its regard for sustainability as a key part of the business plan — and even technologies like ‘digital twinning’ — contribute to creating virtual models of processes, products or services that enhance network optimization. These processes also contribute to low-carbon and energy-efficient enterprises. In industrial materials or manufacturing, for example, retrofitting, refurbishing or repairing existing products lead to lower emissions, while at the same time increasing a firm’s ability to meet demand when disruptions occur.
Overall, circularity of existing assets in the supply chain is essential — ensuring that existing assets are in use for as long as possible by repairing them when needed (using an in-house or external repair team, upgrading them, re-manufacturing and reusing). The supply chain surrounding the manufacturing of a table might produce as much waste as 80% of the cost of the product. This is a result of the mining and/or growing of raw materials required to produce this table (wood, plastic and/or metal), as well as the air pollution resulting from its manufacturing and transport.
And then there is supply. From the top down, C-suite officials including the CEO, general manager, the COO, and maybe even the board might be questioning whether the company will have enough supply to maintain its operations. Top management doesn’t want to upset the company’s big clients, so they want to know how supply chain leaders can help mitigate supply chain risk. This would help them determine contingency plans and re-prioritize projects.
On the finance side, the CFO would want to quickly run forecasts for revenue and expense, ideally in a range of scenarios. He or she might want to tighten budgets, roll out a stricter approval process, and look for savings opportunities in both existing and new supplier relationships. Conversely, in some situations the firm might be better off investing in additional working capital, as it may lead to a higher margin outcome. A simultaneous focus on operations, risk and margins helps position the firm to not only weather events, but also to have the wherewithal to capture the inevitable opportunities that arise during disruptions.
From the outside, suppliers want to know where the organization stands, with existing contracts, projects and terms. They want to know how their business and cash flow will be impacted. They are as interested in their own business continuity as anyone else.
In addition, the company’s customers will want to know whether contractual obligations can be met. On the flipside, some may wind down temporarily, meaning a delay or shortfall in revenue.
The best news is that, when done effectively, BCP not only increases resiliency but also generates a strong return-on-investment that can exceed 10%, according to internal research conducted by River Logic.
Network optimization begets business continuity planning that brings a new level of adaptability to enterprises — adaptability that will enable organizations to better survive and thrive.
Those same enterprises are compelled to carefully examine the careful tradeoffs between integral supply chain costs, service, risks, sustainability, resilience and margins.
Enterprises that value business continuity are forced to take the big picture viewpoint across the entire value chain — where continuity, circular solutions, contingency, resilience and sustainability will drive a level of stability that creates a competitive edge.
Carlos Centurion is president and CEO of River Logic.
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