Planning for Business ContinuityPlanning for Business Continuityto Ensure Supply Chainto Ensure Supply Chain

and Operation Continuityand Operation Continuity

Prepared byPrepared byVintcom TechnologyVintcom TechnologyMr. Tanusit SkunnawatMr. Tanusit Skunnawat

BCM ConsultantBCM Consultant

Agenda

•• IntroductionIntroduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain

Discontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME

Manufacturers• Q&A

Why BCM

• The changing nature of business– Increasing dependency on ICT– Increasing system interdependency– Increasing commercial complexity– Increasing technical complexity– Increasing expectations from customer– Increasing Threat

Global Risks

Economic• Oil price shock/energy crisis• US deficits/fall in US$• Chinese economic hard

landing• Fiscal crisis – demographic

shiftEnvironmental

• Climate change• Loss of fresh water services• Natural catastrophe –

storms, earthquake, flooding

Societal• Pandemics• Infectious and chronic

diseases in developing world• Liability regime

Technological• Breakdown of critical

information infrastructure (CII)

• Emergence of risk associate with technology

The 11 Greatest Supply Chain Disasters

Source:

The 11 Greatest Supply Chain Disasters (cont.)

Source:

SARS

Toyota Brake

Plant Fire

1997

UPS Labor Strike

1998

Sept. 11 Terrorist AttacksGM Labor

Strike

Taiwan Earthquake

1999 2000 2001 2002 2003

Philips Plant Fire

West Coast Ports

LockoutIraq War

Scandals: Enron,

Andersen, Worldcom

Ford-Firestone

Tire Recall

Blackouts US -

Europe

FMD UK

Ref: Adapted from Dr. Debra Elkins, General Motors

Quebec Ice Storm

2004 2005

Nor’Easter

Tsunami

Madrid Attack

London Attacks

Katrina

Ok. tornado - GM

High ConsequenceHigh Consequence--Low Probability DisruptionsLow Probability Disruptions

Ericsson Case

Threats to Company Profitability

• Business Discontinuity– Loss of Revenue Lost Customers– Extra costs and expenses– Reputation

Agenda

• Introduction•• Present & Future Trend in SCMPresent & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain

Discontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME

Manufacturers• Q&A

Supply Chain Management

““Supply Chain Management encompasses Supply Chain Management encompasses ““the the planning and management of all activities planning and management of all activities involved in sourcing and procurementinvolved in sourcing and procurement,,conversionconversion,, and all Logistics Management and all Logistics Management activitiesactivities.. ImportantlyImportantly,, it also includes it also includes coordination and collaboration with channel coordination and collaboration with channel partnerspartners,, which can be supplierswhich can be suppliers,,intermediariesintermediaries,, thirdthird--party service providersparty service providers,,and customersand customers.. In essenceIn essence,, Supply Chain Supply Chain Management integrates supply and demand Management integrates supply and demand management within and across companiesmanagement within and across companies..””

Opportunities & Threats

• Shorter product life cycles

• Customization

• Globalization• Outsourcing

Longer chains, more parties involved, tougher

competitors:

Tougher supply chainmanagement

More product introductions and

products for unfaithfulcustomers:

Tougher competition

Information Technology: A Supply Chain Enabler

• Information links all aspects of supply chain

• E-business– replacement of physical

business processes with electronic ones

• Electronic data interchange (EDI)– a computer-to-computer

exchange of business documents

• Bar code and point-of-sale– data creates an

instantaneous computer record of a sale

• Radio frequency identification (RFID)– technology can send

product data from an item to a reader via radio waves

• Internet– allows companies to

communicate with suppliers, customers, shippers and other businesses around the world, instantaneously

BuildBuild--toto--order cars over order cars over the Internetthe Internet

Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

• Customer sales

• Production

• Distribution

• Customer relationship

• Customer sales

• Production

• Distribution

• Customer relationship

• Push—sell from inventory stock

• Goal of even and stable production

• Mass approach

• Dealer-owned

EE--AutomotiveAutomotive

E-automotive Supply Chain

• Pull—build-to-order

• Focus on customer demand, respond with supply chain flexibility

• Fast, reliable, and customized to get cars to specific customer location

• Shared by dealers and manufacturers

AutomotiveAutomotivePastPast

Supply ChainSupply ChainProcessesProcesses

Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

• Managing uncertainty

• Procurement

• Product design

• Managing uncertainty

• Procurement

• Product design

• Large car inventory at dealers

• Batch-oriented; dealers order based on allocations

• Complex products don’t match customer needs

E-automotive Supply Chain (cont.)

• Small inventories with shared information and strategically placed parts inventories

• Orders made in real time based on available-to-promise information

• Simplified products based on better information about what customers want

EE--AutomotiveAutomotiveAutomotiveAutomotivePastPast

Supply ChainSupply ChainProcessesProcesses

Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

Source: Adapted from Garrison Wieland for “Wal-Mart’s Supply Chain,” Harvard Business Review 70(2; March–April

1992), pp. 60–71.

Relationship between Facilities and Functions along the Wal-Mart Supply Chain

Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

Amazon.com

Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

A WMSSource: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

•RFID technology will facilitate more efficient and timely tracking of goods throughout the entire supply chain

RFID in the Supply Chain

Source: John Wiley & Sons, Inc. (2006)Source: John Wiley & Sons, Inc. (2006)

Agenda

• Introduction• Present & Future Trend in SCM•• Mapping BCM with SCOR ModelMapping BCM with SCOR Model• Identifying Sources of Supply Chain

Discontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME

Manufacturers• Q&A

SCOR -5 distinct Management Processes

Supplier

Plan

Customer Customer’sCustomer

Suppliers’Supplier

Deliver SourceMakeMake DeliverMakeSourceDeliver

Internal or External Internal or External

Your Company

Source

SCOR Model

Return Return ReturnReturn Return

Return Return

Building Block Approach

SourceReturn

Deliver

Best Practice Features

MetricsProcesses

SCOR Model Processes

PlanDevelop a course of action that best meets sourcing, production and delivery requirements

SourceProcure goodsand services tomeet plannedor actualdemand

MakeTransformproduct to a finished state to meet planned or actualdemand

DeliverProvide products to meet demand, including ordermanagement, transportation and distribution

ReturnReturnproducts,post-deliverycustomersupport

Performance Management- SCOR metrics impact on Income Statement -

Source: iCognitive

Performance Management- SCOR metrics impact on Balance Sheet -

Source: iCognitive

3. Continuity Strategies:Determining the selection of

alternative strategies available to mitigate loss,….

6. Exercise & Plan Maintenance:Ongoing plan testing, audit and change management of the BCP and its processes

2. Understanding your business:Business Impact and risk assessment tools are used to identify the critical deliverables and enablers in your business,….

2. Understanding your business:Business Impact and risk assessment tools are used to identify the critical deliverables and enablers in your business,….

6 Steps BCI GPG

11

55 44

33

22

66

4. Developing the Response:Improving the risk profile through

improvements to operational procedures and practices, ….

5. Establishing the Continuity Culture:Introduction of the BCM process by education and awareness of all stakeholders, ….

1. BCM Policy & Program Management

Risk Assessment / Business Impact AnalysisRisk Assessment / Business Impact AnalysisMTPD, RTO,RPOMTPD, RTO,RPO

RTO/RPO Justification

Agenda

• Introduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model•• Identifying Sources of Supply Chain Identifying Sources of Supply Chain

DiscontinuityDiscontinuity• Key Concept of GPG of BCI• Examples of Crisis Management for SME

Manufacturers• Q&A

Risk Identification

Vulnerability / Risk Map

Source: MITSloan MR: A Supply Chain View of the Resilient Enterprise

Possible Areas of Threat to ICT

• Human Error• Application Failure• Network & Telecom Failure• Information Security Threat – Virus, Worm,

etc.• Power Outage• Etc.

Other Critical Areas

• Wide Area Disruption– Fire Blackout– Earthquake– Terrorism– Etc.

• Pandemic Flue•• 33rdrd Party Services Disruption Party Services Disruption BCM for BCM for

the whole value chainthe whole value chain

Agenda

• Introduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain

Discontinuity•• Key Concept of GPG of BCIKey Concept of GPG of BCI• Examples of Crisis Management for SME

Manufacturers• Q&A

The Business Continuity Institute

• Established in 1994• Introduced 6 steps Good Practice Guideline

(GPG) in year 2002, current version 2008• Mission Statement of the BCI :

Promote the art and science of business continuity management

A Unifying Process

3. Continuity Strategies:Determining the selection of

alternative strategies available to mitigate loss,….

6. Exercise & Plan Maintenance:Ongoing plan testing, audit and change management of the BCP and its processes

2. Understanding your business:Business Impact and risk assessment tools are used to identify the critical deliverables and enablers in your business,….

6 Steps BCI GPG

11

55 44

33

22

66

4. Developing the Response:Improving the risk profile through

improvements to operational procedures and practices, ….

5. Establishing the Continuity Culture:Introduction of the BCM process by education and awareness of all stakeholders, ….

1. BCM Policy & Program Management

Understand Organization

IdentifyMTPD

For eachProduct or

Service

Scope and Context of BCM

• Approved Budget and Top Management Support

• Formal Disaster Authorities• Emergency Response, Incident Management

System, and Business Recovery• Embedded BCM

What is Business Continuity Planning

Planning to ensure the continuation of operations in the event of a catastrophic event. Business continuity planning goes beyond disaster recovery planning to include the actions to be taken, resources required, and procedures to be followed to ensure the continued availability of essential services, programs, and operations in the event of unexpected interruptions.

Move toAlternate

SiteReturnHome

ResumeBusiness

Data Synchronization

Restore Technology Capability

Restore Communications

Restore Business Functions

NotificationsVital Records

Lost Data

(Data) Recovery Point Objective

Recovery Time Objective

(If necessary)

RTO/RPO Concepts

The Impact of an Incident

Maximum Tolerable Period of Disruption

Phases of Recovery

BCM to Reduce Guesswork

Timeline

Agenda

• Introduction• Present & Future Trend in SCM• Mapping BCM with SCOR Model• Identifying Sources of Supply Chain

Discontinuity• Key Concept of GPG of BCI•• Examples of Crisis Management for SME Examples of Crisis Management for SME

ManufacturersManufacturers• Q&A

Example Checklists for SME Manufacturers

1. Is the vendor a single or sole source supplier?2. Which product(s) or service(s) does the vendor support and

what percentage of revenue/earnings do they address? 3. How close is the vendor to your production facility? Will a

local or regional disaster affect both you and the vendor and impact recoverability?

4. How often is the vendor's product delivered (if applicable)?5. What is the average on-site inventory level of the vendor's

product (if applicable)?6. How long does it take to order and take delivery of the

vendor's product?7. Does the vendor employ unique production processes and

capabilities where an alternate vendor would be difficult to find?

Risky Business -Failing to Assess Supply Chain Continuityby Michael Porier & Brian Zawada

Recommendations

• Maintaining safety stock • Monitoring transportation entities and planning for

contingent shipping arrangements • Observing product transportation paths, looking for

potential bottlenecks • Developing plans to allow for acceleration of

shipments • Implementing a crisis communications process with

key vendors • Developing continuity plans to address in-house

product receipt, inventory management and product shipment processes, with an emphasis on labor interruption and other single points of failure

Risky Business -Failing to Assess Supply Chain Continuityby Michael Porier & Brian Zawada

• Established in 2000 • Vision:

– To be the preferred Business Continuity Management (BCM) partner in Asia

– To be one of the leading organizations, to set the BCM direction, providing quality and total BCM solutions for organizations in Asia

Business Continuity Planning Asia Pte., Ltd.

• Services– Training, Coaching, and Consulting

• Symantec– Business Continuity

• Disaster Recovery• High Availability

– Security– Information Risk & Compliance– Storage– Infrastructure Operations

• Network Infrastructure– Optical Transport for Storage & Server– Out of Band Management for Remote Site– Free Space Optic for Fast Restoration– WAN Optimization

Vintcom Business Continuity Solutions

Thank you & Questions ?Vintcom Technology Co., LtdVintcom Technology Co., Ltd.Tel: 02-636-8272 ext: 810tanusit@vintcom.co.th