Supply Chain Business Continuity Planning
Supply chain resiliency in the face of unexpected disruptions is essential to meeting customer expectations for quality and availability. The EMC Supply Chain Business Continuity Planning (BCP) program sets strategies to prepare for, and react to, potential disruptions from events such as natural disasters, civil unrest, and financial instability. This planning makes our supply chain more resilient in the face of large-scale events that could create delivery, quality, or production issues.
Though EMC’s operations were not directly impacted by natural disasters or social disruptions in 2013, we continued to improve our program to address increased complexities and potential risks.
In late 2012, we began using a data-driven approach to redefine EMC’s BCP program. We continued this work in 2013, collecting more comprehensive supplier site data that form the basis for our program and implementing a framework to use it to drive increased resiliency. The revised framework consists of three pillars: global sites mapping, risk assessment and mitigation planning, and event monitoring and disaster recovery.
Global Sites Mapping
In 2013, EMC mapped 15,000 part numbers to more than 800 Tier 1 and Tier 2 global supplier sites to better understand our global manufacturing “hotspots” locations where our suppliers are concentrated. These part numbers are mapped back to EMC products and revenue metrics to understand the significance to EMC’s financial performance, should there be a disruption in the availability of any one part, site, or supplier.
Risk Assessment and Mitigation Planning
After mapping, each part is assessed for risk across multiple dimensions, including:
- Natural disaster and other geographic risks
- Supplier capability to recover from risk scenarios
- Supplier financial risk
- The risk scoring is then compiled at the supplier, site, product, and part level to highlight the highest-risk areas for focus. This prioritization exercise allows EMC to proactively identify weaknesses in our sourcing strategies and our supply chain footprint. We then identify actions including: alternate source qualifications to identify new, lower-risk suppliers for those parts at highest risk; component buffering to assure sufficient supply of an essential part if a natural disaster or risk event should occur; and deeper supplier assessments such as onsite audits in areas contributing the highest amounts of risk and simulations of business disruptions to test suppliers’ ability to activate emergency response plans and crisis management. These proactive strategies optimize our supply chain’s flexibility, cost, and risk profile.
In addition, we evolved our supplier BCP self-assessments from a process-based to a capabilities-based tool, enhancing our understanding of suppliers’ readiness in the face of potential disruption. Identifying our suppliers’ capability gaps allows us to coach them in adding capabilities to enhance their resiliency and decrease risk to EMC. We also strongly encourage our suppliers to maintain internal business continuity programs that are consistent with ISO 22301, BS 25999 or equivalent.
Event Monitoring and Disaster Recovery
Each supplier site mapped to an EMC part number is monitored for adverse events around the clock. Events monitored include natural disasters, labor stoppages, supplier bankruptcies, and human-caused disasters such as factory fires and chemical spills. When an event occurs, the part numbers and products impacted are immediately identified. With parts already proactively mapped to sites, EMC can spend less time collecting data and assessing risk and can efficiently and intelligently transition into response and recovery procedures.
In 2014, EMC will continue to leverage the data collected from our Tier 1 and Tier 2 suppliers to increase our supply chain’s capability to withstand disruption. We also hope to expand our efforts where possible, focusing on assessing and mapping relationships with our subcontractors and Tier 3+ supply base. In addition, we plan to focus on product design and strategic sourcing processes and will be developing plans to formally drive risk data and metrics deeper into our product development and planning activities