Business Continuity Management (BCM) – are you going out or staying in?
Organisations are increasingly relying on complex supply chains to deliver services efficiently and cost-effectively. Some industry sectors such as retail, automotive, healthcare to name just a few, are built on their supply chains and many organisations across all sectors, are choosing to outsource functions and services to streamline operations and focus on their core capabilities.
In both scenarios, the added exposure to third-party risks needs to be identified and managed. When critical functions are managed externally, it becomes more challenging to ensure they are delivered efficiently, and in a resilient manner that protects your business. The key question is: how confident are you, that your supply chain relationships can support your business without disruption?
Why supply chain resilience is gaining regulatory attention
Regulatory bodies are increasingly scrutinising supply chain risk. Factors driving this focus include evermore complex interconnected networks, an increase in customer expectations in terms of increased flexibility and shorter timescales, and an upsurge in wider and global on and off-line disruptions. Businesses are still ultimately accountable for the performance and security of the services delivered by third parties. While outsourcing can help reduce internal workloads and operational costs, responsibility for risk mitigation stays firmly in-house.
As supply chains become more layered, it’s vital to have a clear process for evaluating and managing third-party dependencies, especially as these suppliers face their own set of vulnerabilities.
1. What supply chain resilience means
Definition
Supply chain resilience is your organisation’s ability to absorb shocks, respond quickly, and maintain continuity when disruption hits.
What it involves
It’s about predicting potential issues, adapting in real time, and bouncing back fast when the unexpected happens.
Why it matters
Resilient supply chains reduce lost revenue, limit operational costs, support customer retention, and protect brand trust.
2. Why supply chain resilience has become business-critical
Constant disruption
Events like COVID-19, extreme weather, and political tensions have exposed the fragility of global supply chains. Resilience is not a “nice to have”, it’s an organisational necessity.
Operational advantage
Firms that maintain flow during disruption can gain market share and outperform slower-moving rivals.
Long-term cost savings
Minimising downtime and avoiding last-minute fixes reduces long-term costs, even if it means higher up-front investment.
Customer expectations
Customers expect consistency. Reliable delivery strengthens loyalty and increases repeat business, and your ability to continue to deliver even in tough conditions, can set you apart from your competitors, win over new business and increase your market share.
3. What you can do to deliver supply chain resilience in practice:
We recommend that you follow this comprehensive 8-point checklist as a journey – it’s not intended to be a one-off tick-box exercise:
- Supplier diversification: Work with multiple suppliers across different geographies to reduce exposure to any single failure point. This includes developing relationships with one or more backup suppliers of critical services, so that you have pre-vetted alternative providers ready to step in at short notice to reduce exposure if your primary provider encounters problems.
- End-to-end visibility: Track activity across your full supply chain, including second- and third-tier suppliers, to spot risks early.
- Pinpoint weak spots: Audit your supply chain to flag risks, like sole-source suppliers, congested ports, or fragile IT systems. Then take action to address these! It’s also wise to evaluate each of your key suppliers’ own resilience, not just in relation to your needs. You need to know that they have a resilience approach and do not have inherent risks that are harder to relate directly to services they deliver to you. Do they have contingency plans in place internally? Can they continue their business operations during a crisis? By aligning your own business continuity planning with those of your key suppliers, you build a stronger, more adaptive supply chain.
- Operational agility: Make sure you can move quickly to switch suppliers, reroute shipments, or shift production when conditions change. Prioritising agility over cost-savings in your supply chain to maintain continuity of your operations, is key.
- Strong partnerships: Build trust and alignment with suppliers and logistics partners. Open lines of communication make response faster and more effective. Specifically, share data, discuss risk mitigation, and build shared contingency plans.
- Smart tech upgrades: Adopt tools that give you real-time data, automate processes, and improve communication across your network., for example AI, automation, machine learning, blockchain, and digital twins to improve your forecasting, speed up decisions, and gain insight into supply chain dynamics.
- Scenario planning: Develop detailed response plans for likely disruptions. Develop fallback strategies with alternative suppliers, routes, production lines. Then test and update them regularly.
- Measure and refine: Track the performance of your resilience efforts. Adapt your strategy based on what works, what doesn’t as well as what changes. Get expert support from resilience and business continuity providers.
Staying ahead in a complex supply chain landscape
As global supply chains grow more complex, the risks associated with third-party dependencies increase in parallel. With regulators demanding greater transparency and control, businesses must take proactive steps to shore up resilience.
By identifying high-risk suppliers, embedding resilience into supplier management processes, and maintaining open lines of communication, organisations can reduce the impact of potential disruptions. Effective supplier risk management isn’t just good governance; it’s a strategic priority for long-term business continuity.
Support to strengthen your supply chain
Creating and maintaining a resilient supply chain can be a challenge, but you don’t have to face it alone.
Our team can help you conduct a comprehensive business impact analysis, mapping your key suppliers and assessing the criticality of their services. Using our powerful Shadow-Planner platform, we can automate this process or guide you through it manually, whichever suits your environment.
Take a proactive next step towards better supply chain resilience
As part of our managed services offering, we carry out third-party supplier Business Continuity Management (BCM) assessments. This gives you assurance that your external partners are prepared for disruptions - so their disruptions won’t become yours!
Colin Jeffs MBCI, Head of Operational Resilience Consulting, examines the advantages and disadvantages of outsourcing versus in-house business continuity management (BCM). As a provider that supports customers with both options, Wavenet offers an unbiased perspective on the factors that influence this critical decision.
In the past two years, the importance of business continuity management (BCM) has grown significantly. Risks that organisations believed they were prepared for turned out to be more damaging than anticipated, with some even facing dire consequences due to the pandemic and its associated challenges. As a result, companies of all sizes have re-evaluated the true meaning of business continuity. It is now recognised as a necessity rather than a luxury, extending beyond theoretical risk management protocols.
With this realisation, the next pivotal choice revolves around whether to handle BCM internally or outsource it to a specialised third party. Each approach has its pros and cons, but either way, you don’t have to navigate the path alone. Wavenet, as a provider, offers support for in-house BCM while also delivering it as a managed service. We understand the complexities involved and can guide you towards the right solution for your organisation.
The pros and cons of internal business continuity management
The advantages and disadvantages of implementing in-house BCM vary, although it is generally more suitable for larger organisations.
The effectiveness of in-house BCM is not solely determined by the size of the enterprise but rather by the complexity and uniqueness of their IT and operational environments. Larger organisations with intricate business structures often have more nuanced department responsibilities, specific compliance protocols, and intricate reporting networks.
Having someone within the organisation who possesses a comprehensive understanding of the business’s strategic, tactical, and operational details is advantageous for identifying risks, potential failure points, and appropriate mitigations. One significant benefit is that internal personnel have immediate access to all relevant internal resources related to the risk landscape. They are also available to the company at all times, exclusively dedicated to the business, and already contracted to handle these responsibilities.
However, there is an obvious challenge: finding such a highly skilled specialist in the first place.
As the company grows in size, the number of potential risks also increases. Entrusting one person or a single department with the oversight of these challenges is a demanding task, and recruiting for such a specialised role is not easy. If the company does not hire a dedicated specialist, it may result in the individual’s attention being divided between their regular responsibilities and the additional function, leaving the business vulnerable.
Another consideration is the potential for “change creep.” When everything within the business feels familiar, there is a risk of becoming complacent or overlooking the changing external environment. Similarly, challenging the status quo may be difficult for someone who has personal connections, friendships, and loyalty to those who established the existing rules. On the contrary, a consultant or external resource can provide unbiased insights and recommendations without being influenced by internal politics.
However, the most significant drawback of in-house BCM is the possibility of the ideal person leaving the company in the future.
Losing an internal resource who has successfully addressed all the aforementioned challenges to ensure optimal business continuity is not only detrimental but also highly likely in most cases. Therefore, regardless of the pros and cons of in-house BCM, it is sensible to seek external support as part of the overall equation.
Bringing a third-party in to provide discrete consultation, assessment, validation, audits and workshops can help to free up internal resources and help drive further internal change as required. Vitally, it also adds another pair of eyes to mitigate against any complacency and any subconscious resistance to progress.
The pros and cons of outsourcing business continuity management
While an in-house BCM function may rely on a single person or a small team to handle internal operations, outsourcing BCM provides access to a dedicated provider with a team of specialists who take an outside-in approach based on real-world experience.
Cost is always a factor to consider when outsourcing, but it can often be more cost-effective than hiring and maintaining in-house staff. Outsourcing allows for more focused BCM spending, leading to potential cost savings in the long run.
By working with a dedicated provider, companies can establish clear expectations and deliverables, enabling them to directly measure the success of their BCM investment. This clarity can sometimes be clouded when BCM activities are conducted in-house.
However, it’s important to exercise caution. Since the provider may have multiple clients, there is a possibility that they might use templates or generic approaches to expedite their activities. Therefore, enterprises should clearly communicate their specific BCM requirements from the outset.
The advent of Business Continuity as a Service has elevated the BCM landscape through specialised providers. However, it’s crucial to foster a relationship based on mutual understanding. Providers who recognise and demonstrate that there is no one-size-fits-all solution will be the ideal partners to guide your enterprise successfully through the business continuity journey.
Guidance for every journey
There are similarities between both in-house and outsourced approaches to business continuity management (BCM). For example, the need to challenge the status quo is important regardless of whether it’s an internal specialist or an outsourced consultant. To determine the best approach, a tailored perspective must be applied.
While business continuity impacts all businesses, it does so in unique ways. It’s crucial to start the BCM journey by focusing on the specific company itself, including its objectives, strategy, ambitions, strengths, weaknesses, and vulnerabilities. From this foundation, the level of assistance and technological intervention required can be assessed. This may involve utilising software for administration, tracking, control, and reporting, which can be managed internally or guided by an outsourced provider.
Ultimately, BCM is vital for companies of any size. The key is to determine early on whether an in-house, outsourced, or hybrid approach is best suited to meet your requirements. The ultimate goal is to have the peace of mind that your business will not come to a standstill in the face of adversity.
About the author
Colin Jeffs MBCI moved into the realm of business continuity from IT project management where, as part of implementing IT systems, he had to implement resiliency. Colin has worked in business continuity/operational resilience and crisis management for more than 28 years, holding senior roles in these disciplines for many years at major financial institutions in the city of London. Colin now heads up Wavenet’s award-winning operational resilience consulting and software division.