The advantage of business continuity for retailers

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:

1. 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.
2. End-to-end visibility: Track activity across your full supply chain, including second- and third-tier suppliers, to spot risks early.
3. 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.
4. 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.
5. 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.
6. 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.
7. Scenario planning: Develop detailed response plans for likely disruptions. Develop fallback strategies with alternative suppliers, routes, production lines. Then test and update them regularly.
8. 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!

However, with evolving consumer behaviours, the rise of round-the-clock shopping, and the continuous advancements in online and mobile technologies, data analytics, and business intelligence tools, the need for effective business continuity management has become a paramount concern. It is now essential for retailers to protect their technology investments and maintain a competitive edge. Alongside the need to “keep the lights on.”

Here are some of the key benefits that business continuity brings to retailers like yourself:

Safeguards your valuable data

In the retail industry, data plays a crucial role. It provides valuable insights that drive sales, enhance the customer experience, and optimise various aspects of operations such as inventory management and waste reduction. Any downtime or data loss can have a significant impact on the success and continuity of your business.

As the prevalence of cyber threats continues to grow, investing in disaster recovery services and business continuity has become imperative for retailers. The costs associated with dealing with breaches or outages far outweigh the investment in proactive measures. By implementing strategies like real-time system mirroring and immutable backups, you can ensure the protection of your critical systems. In the event of a disruption, these measures enable quick recovery in a secure and dedicated location, minimising downtime and ensuring the integrity of your data.

Immutable backups provide additional protection against not only traditional risks like equipment failures or environmental issues but also against evolving cyber threats such as ransomware. By storing backups offsite and in an air-gapped environment, they offer an extra layer of security that cannot be tampered with.

Protects your brand reputation

Consumer trust is the holy grail of a retailers success. Consumers buy into a brand rather than individual retail channels, and despite difficult economic times, trusted retail brands have increased their profitability and fostered their marketing position. But what would happen if that trust was breached?

When customers lose trust in a retailer, they start to look elsewhere, which usually leads them to a rival business who has not just suffered a cyber attack.

And it doesn’t stop there, these consumers then go on to tell others about their experience, complain via social media channels and leave negative reviews on platforms such as TrustPilot. It is evident that losing data and trust go hand in hand.

It’s essential that you have an effective data protection strategy in place as well as a disaster recovery plan to mitigate risks. It is also just as important to have a robust crisis communications plan – having a plan in place that outlines proper communications with your customers leads to increased transparency and trust.

Safeguards your supply chain

Inevitably, disruptions will arise—it’s not a matter of if, but when. Establishing documented contingency plans to ensure the uninterrupted delivery of your products and services during these disruptions is crucial for the ongoing prosperity of your business, especially during critical retail periods such as Black Friday, Christmas, or the summer season. Any disruption occurring during these peak trading periods could have catastrophic consequences.

Effectively managing supply chain risks is a fundamental aspect for retailers and can not only safeguard your operations when issues arise but also give you a competitive advantage over rivals who may not be as well-prepared. By proactively addressing potential disruptions and implementing strategies to mitigate their impact, you can demonstrate resilience and reliability to customers, setting yourself apart in the marketplace.

Mitigate financial risks

According to recent data from IBM, in 2022, the average time to identify and contain a data breach in the retail sector was 287 days. The longer it took to detect and resolve the breach, the higher the associated costs. In terms of financial impact, the average cost of a data breach for retailers was £2.68 million in 2022, a significant increase from £1.64 million in 2020.

Furthermore, the study highlights the importance of having robust business continuity plans in place. Organisations that had effective business continuity planning and tested disaster recovery plans experienced an average total cost of a data breach that was £2.01 million lower than those without such preparations. This demonstrates the clear correlation between prioritising business continuity planning and reducing financial risks associated with data breaches.

These statistics underscore the need for retailers to invest in comprehensive security measures and prioritise business continuity planning to safeguard their operations, protect customer data, and mitigate the potential financial consequences of a data breach.

What should I do next?

Wondering what your next steps should be? The concept of business continuity management (BCM) has gained even more significance in recent years, prompting retailers of all sizes to re-evaluate its importance. The consequences of not having a BCM plan in place can be severe and debilitating. It’s easy to get overwhelmed by competing demands from various departments, management, and IT, resulting in confusion, delays, and potential damage to reputation.

If BCM is a top priority for you but you are unsure where to begin, we recommend checking out our advisory article “5 top tips for successful business continuity planning”.

The next crucial decision revolves around whether to handle BCM internally or outsource it to a specialised third party. Both options have their pros and cons. To gain a deeper understanding of this topic, you can read more on that in our insightful article – “Business Continuity Management (BCM) – are you going out or staying in?”

We hope these resources prove helpful to you. However, it’s worth noting that we are also the industry leader for business continuity and operational resilience in the UK. Whether you choose to outsource BCM or manage it in-house, we offer award-winning services and support to assist you along the way.