FRAMINGHAM (03/18/2004) - A recent study of companies with complex supply chains (like consumer products makers and retailers) by Ernst & Young LLP found that when it comes to business continuity, companies pay more attention to their data than their operations. While most respondents have established testing procedures to ensure that their data (names, addresses and SKUs) is backed up, far fewer have tested the continuity of their supply chain operations (inventory, warehousing and logistics).
John F. Barile, senior manager of technology and security risk services at Ernst & Young, says backing up data is a longstanding no-brainer in IT. But Barile says executives seldom think about the processes and failures that fall out of IT's scope. They see incidents such as power outages as unlikely, and therefore difficult to rationalize and plan for. Furthermore, he says, it's easy to blame IT when the systems go down. The supply chain's shared ownership (IT, logistics and so on) makes determining responsibility tougher.
"Business continuity needs to be more than recovery of the systems," says Barile. "It's also the recovery of the business process."
Provide insight to operations management during business-impact analysis. Many supply chain users will have a detailed understanding of the specific systems that they use to maintain connectivity throughout the supply chain, but not of all upstream and downstream relationships whose loss could bring the entire enterprise to a halt.
Develop IT disaster recovery plans to support supply chain initiatives, such as redundancies in communications between the supply chain organization and external partners.
Assist in the categorization of critical supply chain partners whose loss might not be apparent to supply chain users with a limited IT background (utilities, IT providers, outsourcers). Offer and implement technical solutions to mitigate risk of these critical enterprises, such as system redundancy.
Help develop a testing protocol to ensure that all supply chain partners have developed and exercised their own continuity plans, as the loss of any critical just-in-time supplier could negatively affect operations.
Lend qualified project managers to the supply chain business continuity plan project management office.
Exercise supply chain business continuity plans jointly with IT disaster recovery plans.
Provide capabilities to ensure that supply chain continuity plans are kept up to date and consistent with procedures used to keep IT disaster recovery plans updated.