Supply chain risk and resilience

For many businesses, working with third-party suppliers or contractors to provide stock and services such as catering and cleaning is essential, and without them, the business could not function. Supply chains can make life a lot easier if you don’t have the resource in-house, or you simply don’t want the hassle.

Using a third party can improve operational efficiency, reduce costs, help provide a high-quality service, and enable you to focus on other priorities.

But what if your supplier is suddenly unable to provide their services, with little or no warning? During the pandemic, many businesses had to scale down or change the way they operate. Simply leaning on the presumption that a third party will have their own Business Continuity Plan in place to keep providing the same service isn’t always enough. You should always check they have a plan and how it would impact you – and how you would respond.

Whilst third parties often have their own business continuity arrangements in the event of their own material disruption, have you considered how your service requirements might look if you were to face your own catastrophic event?

What would you say to your external caterer if your ovens fail, and they’re unable to provide cooked food? If your props store floods and the next touring company cannot use it, what is the alternative? Or you experience a total power failure, meaning the services of several suppliers need to be at least temporarily changed?

Would you require the same level of service, or would you scale it down for an interim period whilst you remedy the material disruption, or even bring a service in-house temporarily? Is there a temporary solution to remain open and operational?

Working through this thought process can help you embed supply chain resilience into your Business Continuity Management Programme.

Identifying potential disruptions that may impact services provided by third parties and thinking through a response strategy can support you in managing incidents on time and limiting potential impact.

In the face of a material disruption:

• Do you have a clear view of your third-party arrangements, for example, suppliers, partnerships?
• Do you understand which ones are key and linked to your critical services (those you need to keep up and running)?
• Are protocols in place in terms of who to contact in an emergency?
• Have you thought about potential scenarios and whether you would want to scale down or even stop receiving a service during this time?
• Do you even want to temporarily provide a service yourself for a short interim period on a smaller scale?
• Do you require something additional or different from your third-party supplier during a disruption to take some weight off and free up time to focus on responding to the situation?
• Have you tested your plan with a particular focus on third-party arrangements, response strategies, and resilience?

Visit our business continuity management guidance for further support with embedding supply chain resilience into your Business Continuity Management Programme, and help to identify potential supply chain issues.