Supply chain a concern for manufacturing

Posted on 17 Mar 2015 by Victoria Fitzgerald

A third (35%) of businesses in the manufacturing industry are extremely concerned about potential supply chain disruption according to research released by BSI, the business standards company and the Business Continuity Institute (BCI).

More than three quarters of manufacturing firms (77%) report increasing supply chain complexity as the fastest growing risk in business continuity, with malicious attacks via the internet (68%) and increased regulatory scrutiny (58%) taking second and third place.

Global sourcing across supply chains creates severe business continuity challenges for manufacturers, with the research showing that suppliers operating in riskier countries are the fastest growing business continuity risk.

Risk exposure varies by sector. The proportion of supply chains exposed to elevated, high or severe risk of natural disaster is highest for the apparel (85.6%), automotive (53%) and aerospace (51%) sectors, all of which have a high proportion of manufacturing and raw material sourcing based in politically and geologically unstable regions.

BSI’s top ten tips for business continuity planning:

  1. Identify critical business functions
  1. Remember the seven ‘P’s needed to keep your business operational
  1. Understand and track past incidents with suppliers 
  1. Assess and Understand Vulnerabilities and Weak Points
  1. Agree and document your plans
  1. Make sure plans are communicated to key staff and suppliers
  1. Try your plans out in mock scenarios
  1. Expect the unexpected 
  1. Make sure your continuity plans are nimble and can evolve quickly 
  1. Make sure you’re not just ‘box-ticking’ 

While the relative risks differ, the key lesson for organisations to consider is their planning for potential disruption. For example, the automotive sector suffered heavily from the 2011 Japanese tsunami due to a global reliance on a single manufacturer of a particular pigment essential for metallic paint finishes.

As a result of the disruption, production in the factory was halted for three months before normal operations resumed, causing long lasting effects across the automotive marketplace.

Courtney Foster, supply chain solutions manager at BSI commented: “Recent global incidents have thrown the risk of supply chain disruption into the spotlight.

“Our data shows an alarming percentage of suppliers in a variety of the industries are based in areas with significant risk of natural disaster or man-made disruption.

“Our experience shows that while companies are aware of and test for internal risks, they are failing to map or assess risk effectively across their supply chain.

“More often than not, only the first tier of suppliers is considered with no thought given to those further down the supply chain. Testing and assessing every supplier across every tier is prohibitively time consuming for businesses. By concentrating on higher risk suppliers, companies can be more effective and confident in mitigating risks.”