| Norwich Union Risk Services offers supply chain business continuity management advice
Alan Trueman, business interruption risk adviser for NURS, says: "For many businesses the supply of raw materials, components, goods and warehousing facilities are routinely outsourced, together with many services which, until recently, have usually been carried out in-house, such as payroll, IT and even HR. But this leaves firms wide open to disruption. "The loss of just one supplier could have a serious effect on a firm, particularly if that one supplier provides the main component for the business. The impact on an organisation could greatly increase if the goods being supplied are in anyway seasonal and not reaching the business in time." He added: "With globalisation, the threats to the supply chain are far greater than previously, and could now include risks such as severe exchange rate fluctuations, pandemic situations, weather and political issues. "The recent substantial increase in the price of fuel is one example which has led to concerns that haulage companies could be forced out of business." Strategic measures Alan outlines several measures to counteract possible threats to supply chain services: • Identify which of the business’s critical activities are dependent upon suppliers of products and services and undertake an appropriate risk assessment and business impact analysis on them, as if they were in-house activities. Then implement any necessary mitigation measures. • In respect of critical suppliers, consider the possibility of at least dual sourcing or ensuring they have excess capacity, possibly at another location. Consider alternative suppliers in different currency zones to mitigate the ups and downs of exchange rates. • Check the efficacy of the supplier's business continuity arrangements to safeguard the businesses position and make this a key part of the competitive tendering process when engaging new suppliers. • Introduce service level agreements and re-draw supplier contracts if required. Where insurance is one of the business's risk management solutions, ensure that the cover has been extended beyond the firm's premises to protect against incidents happening elsewhere in the supply chain.
•Date: 26th June 2008• Region: UK/World •Type: Article •Topic: BC general
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