Supply Chain Business Continuity Planning
Supply chain resilience in the face of unanticipated 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 2015. 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 experiencing increased complexity and risk.
In 2015, we continued to collect data and use that data to enhance our suppliers’ recovery capabilities to reduce risk in our supply chain.
We maintain visibility into our supply chain by mapping our products’ parts to more than 800 Tier 1 and Tier 2 supplier sites. This enables the Supply Chain Business Continuity team to visualize and analyze our global manufacturing footprint. These parts and supplier sites are then linked 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, macroeconomic and geopolitical risks
- Supplier capability to recover from risk scenarios
- Supplier financial risk
The valuable data that we collect and analyze enables us to develop more effective policies, set standards, and track the performance of our supply chain to those standards. For example, we can identify parts that, though sourced from multiple suppliers, are manufactured at sites within a 50 kilometer radius of one another. This geographic clustering increases risk in the event of a natural disaster or an economic or social disruption in that location. When such clustering is identified, we can work with our engineering and supplier teams to qualify additional manufacturing sites outside of that area.
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 where needed.
In addition, EMC collects supplier BCP self-assessments to understand suppliers’ tactical readiness in the face of potential disruption. To help our suppliers address gaps in their business continuity management systems, we created two online training modules on business continuity best practices for their internal facilities and their supply chains. We also completed business continuity exercises with some of our suppliers to test their readiness for an unexpected disruptive event. Collaboration across the supply base is essential to any successful supply chain risk management program, and we believe these exercises have strengthened the partnership between EMC and our suppliers to address business continuity risks.
EMC has also deepened our partnership with our property and supply chain insurer to reduce supply chain risk. The insurer’s engineering teams conduct intensive property audits at key supplier sites, providing more data on areas of potential risk. We address the risks by driving corrective actions to increase resiliency to disruption, benefitting both our suppliers and EMC.
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, we spend minimal time collecting data to understand exposure and risk at the time of the event. Instead, the organization is able to begin response and recovery procedures immediately.
In 2016, we will continue our focus on improving our suppliers’ management systems via intensive assessment of our suppliers’ business continuity plans, as well as extending the property audit program in partnership with our insurer.