Review key suppliers to function efficiently

Jun 6 2008 By Greig Cameron

Services could be brought in house to avoid potential risks

Most organisations depend on external suppliers for goods and services to function efficiently.

But many businesses take this dependency for granted and do not consider the potential disruption any changes in the supply chain could cause.

The new British standard for business continuity management, BS25999, advises this is something which should be looked at when conducting a review.

Brian Davey, senior consultant at Teed Business Continuity, has some tips on what areas to focus on.

First he suggests determining the identity of key suppliers.

He said: "This is achieved through noting the suppliers each business area depends on to maintain continuity of its MOST organisations depend on external suppliers for goods and services to function efficiently.

But many businesses take this dependency for granted and do not consider the potential disruption any changes in the supply chain could cause.

The new British standard for business continuity management, BS25999, advises this is something which should be looked at when conducting a review.

Brian Davey, senior consultant at Teed Business Continuity, has some tips on what areas to focus on.

First he suggests determining the identity of key suppliers.

He said: "This is achieved through noting the suppliers each business area depends on to maintain continuity of its critical activities and agreeing the negative impacts, over a timeline, which would result should loss of supply actually occur.

"For each supplier the recovery time objective, i.e. the time at which the supply of goods or services must be resumed in order to keep impacts within acceptable limits, can then be plotted.

"It is also worth including suppliers which are either very small in size, so called "one man bands", or which own exclusive rights to the supply of goods or services they provide as such suppliers tend to represent a higher risk by virtue either of being more exposed to a single incident which results in an outage of supply to you or there being no obvious alternative sources of supply to replace them."

Davey believes the next step should be to analyse key suppliers.

He said: "Once you have created a list of those suppliers identified as key you should now examine each one in turn to review the supplier's continuity capability.

This can be achieved through reviewing their business continuity plan and talking through with them how they would ensure continuity of supply should adverse situations arise."

You should also ask questions about suppliers' response plans and contingency measures.

Finally, it is crucial to develop a coping strategy should something happen.

Davey said: "The above analysis will highlight where there are gaps between the recovery time objectives of your organisation and the capability of suppliers to meet these objectives.

"The next stage is to find ways of eliminating the identified gaps."

For each supplier where gaps have been identified consider the following:

Is there an alternative source of supply available at short notice?

Can reliance on the supplier or the negative impacts of a supply disruption be reduced?

Can a 'workaround' be developed to allow you to cope with the maximum downtime which the supplier's continuity capability would dictate?

Could the services provided be brought in house to eliminate the reliance on the supplier?

Davey admits there is no point in creating coping strategies which need investment if the senior management team are willing to accept current risk exposure.

He said: "You may still want to consider coping strategies, such as workarounds, which imply little financial outlay.

"Through conducting a review as outlined above, you can help your organisation to align with BS25999 and ensure continuity of business should one of your key suppliers experience a disruptive event."

For further information log on to www.bs25999.com or www.teed.co.uk.

'Analyse how they would ensure supply should adverse situations arise'