Supply chain resilience: we need to learn lessons from the past
- Published: Monday, 27 September 2021 07:18
Supply chain issues have been a recurring issue through the COVID-19 pandemic, one of the latest examples being the sudden Carbon Dioxide shortage that occurred in the UK recently. Organizations seem to have failed to learn resilience lessons from a similar issue in 2018 says Patrick Roberts.
I experienced a strange feeling of déjà vu over the last couple of weeks, as the story developed of a growing crisis with supplies of Carbon Dioxide across the UK. As a consequence of the recent unprecedented hike in energy prices, the UK’s main producer of fertiliser, CF Industries, had shut down production. This led to a massive shortage of CO2 for the food and drink industry, with industry representatives warning of production stoppages within days. Whilst the UK Government stepped in and paid CF Industries to resume production in the short term; the most shocking thing about the whole incident is that we appear to have learnt nothing from the Europe-wide shortage of Carbon Dioxide in June 2018.
Back in the glorious summer of 2018, in the midst of England’s successful World Cup campaign, the mood was more light-hearted. Many commentators at the time focused on the potential impact of Carbon Dioxide shortages on beer production! But the more serious impact on the wider food and drink industry was widely reported too, at least in the more serious media outlets. Having come so close to disaster three years ago, why does it appear that nothing has been done to mitigate the risk?
I would strongly suggest that (at least) two distinct factors are at play here. Firstly, it’s a perverse twist of human nature that exposure to near misses or the experience of surviving a disruption tends to make us feel less, rather than more, vulnerable to future disasters! For instance, analysis of the Challenger Space Shuttle disaster found that the NASA engineers who were most aware of the catalogue of previous problems with the solid-fuel booster rockets were also the ones who were most confident about the safety of the shuttle. Likewise, we found that many organizations based in London concluded that their ability to survive the 7/7 bombings was evidence of a high level of resilience; and that they didn’t need to waste time and money on business continuity management. I strongly suspect that many organizations will draw the same (erroneous) conclusion from surviving the COVID-19 pandemic, neglecting to consider how they would have coped without massive government assistance.
Secondly, I observe in my day-to-day work helping organizations to implement business continuity management, that people frequently struggle with the business impact analysis. It is the most complex and time-consuming stage in the whole business continuity management process, but absolutely critical to the success of the overall programme. Clarity on the resources required to carry out your critical activities is the basis for both risk mitigation decisions and contingency planning for possible disruptions. Absent a solid business impact analysis, the best you can hope to produce is some sort of incident management plan to manage the immediate consequences of disruptions as and when they occur. It would appear though that, even after the warning in 2018, both the UK Government and many in the food and drink industry failed to grasp the criticality of ensuring a reliable supply of Carbon Dioxide.
In persuading CF Industries to resume production, it appears that the UK Government has averted a crisis for now. Hopefully, this time around, the lessons identified in 2018 will become lessons learned. I am not suggesting that improving business continuity in the food industry will be straightforward, and we must resist crude and wasteful knee-jerk responses such as massive stockpiling along the whole supply chain. But the problem is too important to ignore; and substantive changes must be made if we are to prevent future disruptions.
Patrick Roberts is a Director of Cambridge Risk Solutions Ltd.