Supply Chain Business Continuity Planning
Supply chain resilience 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, unexpected environmental, financial or social events that could disrupt our supply chain.
EMC’s supply chain operations were not impacted by natural disasters or social or economic disruptions in 2014. Even though we have been successful in avoiding disruption, we are continually improving our program to perform more effectively and efficiently within an industrial environment fraught with increased complexity and risk.
In 2014, we enhanced our BCP program by extending data collection more deeply in the supply chain; using that data more effectively to drive actions that increase our resilience; and tracking metrics to assess our progress over time.
In 2014, we continued to augment visibility into our supply chain. We mapped our products’ parts to more than 900 Tier 1 and Tier 2 supplier sites, allowing us to visualize and analyze our global manufacturing footprint. These parts are then mapped back to EMC products and revenue metrics to understand the significance of any one part, site or supplier to EMC’s financial performance.
Risk Assessment and Mitigation Planning
Once parts are mapped to specific supplier sites, 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
Risk scores are compiled at the supplier, factory site, product and part levels to highlight areas of highest risk. This exercise enables EMC to proactively identify weaknesses in our sourcing strategies and supply chain footprint. We mitigate those risks through targeted actions including alternative source qualifications, component buffering, and deeper supplier assessments and testing of their business continuity plans.
In addition, EMC collects supplier BCP self-assessments to understand suppliers’ tactical readiness in the face of potential disruption. Where needed, the EMC BCP team coaches suppliers on capabilities to enhance their resiliency and decrease risk to EMC.
All of this valuable data that we collect and manage enables us to develop effective policies, set standards, and track the performance of our supply chain to those standards. For example, we can identify parts that, even though sourced from multiple suppliers, are manufactured at sites within a 50 kilometer radius of one another. This increases risk in the event of a natural disaster or an economic or social disruption in that location. When such geographic clustering is identified, we can work with our engineering and supplier teams to qualify additional manufacturing sites outside of that area.
Event Monitoring and Disaster Recovery
Each supplier site mapped to an EMC part is monitored for adverse events on a 24/7 basis. 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 proactively mapped to sites, EMC spends minimal time collecting data to understand exposure and risk at the time of the event. Instead, the organization is able to immediately begin response and recovery procedures.
In 2014, we implemented a proactive “playbook” to address seasonal flooding in Thailand. By regularly monitoring rainfall, dam levels, and climactic factors such as ocean temperatures against our supplier sites’ flood defense capacities, we are able to assess flood risk weeks before flooding actually occurs and proactively take appropriate action.
In 2015, we will be using the supplier self-assessment data to assess our suppliers’ capability gaps against business continuity best practices and standards such as ISO 22301. We will launch both “horizontal” projects (addressing common gaps across groups of suppliers) and “vertical” projects (working one-on-one with suppliers that display several gaps) to improve our suppliers’ capabilities, which we believe will increase the resiliency of our supply chain as a whole.
We will also be enhancing the product design and strategic sourcing processes to formally drive BCP risk data and metrics deeper into our product development and planning activities. This will help assure that every possible effort is taken to reduce supply chain BCP risk prior to product launch.