SUPPLY CHAIN BUSINESS CONTINUITY
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 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.
EMC’s operations were not impacted by natural disasters or social disruptions in 2012. A network of strategic information sharing was a key factor in avoiding serious supply chain interruptions. With each severe typhoon or hurricane, EMC monitored the path of the storm and warned suppliers of potential risk, expanding the communication channels to enable rapid decision-making and avoid disruption. Suppliers communicated diligently about events they encountered, such as the International Longshoremen’s Association strike and the earthquake off the coast of Indonesia. These early responses built stronger contingency plans and drove BCP deeper into the normal operations of all functions.
Our Approach to Supply Chain BCP
Our BCP program assesses suppliers’ vulnerabilities to disruptions and establishes plans to mitigate risk. We work closely with suppliers to understand their programs and help them improve. To this end, we:
- Request supplier self-assessments of their business continuity plans
- Conduct onsite audits of strategic suppliers
- Work with suppliers to make improvements if weaknesses are discovered
- Engage in simulations of business disruptions to test suppliers’ ability to activate emergency response plans and crisis management
- Continually measure against key indicators through onsite visits
We also have our own tested playbook for crisis response and management when an event occurs.
EMC expects all of our suppliers to incorporate business continuity practices into their operations. We use the international standard of ISO 22399 as a benchmark against which we measure their BCP programs.
We also include BCP indictors in our supplier performance scorecard which guides purchasing decisions. In addition to the ISO 22399 indicators, we analyze suppliers’ short- and long-term financial health to assess the potential risk of financial instability. These BCP scores are incorporated in suppliers’ quarterly business reviews.
Self-assessments provide insight into suppliers’ BCP practices and program maturity levels. In 2012, 80 percent (by spend) of Tier 1 and managed Tier 2 suppliers completed BCP self-assessments. Most of these suppliers reported progress in securing resources, skills, and knowledge to integrate BCP into their daily operations.
Audits and Exercises
On a quarterly basis, select strategic suppliers are chosen for audits. Auditing suppliers’ BCP programs gives us a deeper understanding than what is visible in a self-assessment. The process of reviewing compliance guidelines clarifies suppliers’ BCP objectives, planning, emergency response, mitigation, and recovery plans. Any audit findings are addressed through corrective action plans.
We also conduct activities to enhance suppliers’ awareness of BCP and to encourage continuous improvement. In 2012, we hosted a joint simulation exercise with a supplier in which we staged a mock emergency scenario to test the supplier’s and EMC’s BCP plans. This training exercise gave us new insights and identified some potential gaps. We took the lessons learned and implemented an action plan to make our BCP plans more resilient.
Natural Disaster Risk Assessment
Another key accomplishment in 2012 was the completion of a Natural Disaster Risk Assessment which assesses which countries are most at risk from various natural disasters. The study looked at earthquakes, extreme weather, flooding, volcano clouds, and other disasters, to better understand risk factors and how EMC might be able to improve its early warning systems. The next objective is to develop a robust warning system that gives us enough time to activate our contingency plans and protect deliveries and supply lines.
Collaborating for a Broader Perspective
In 2012, the BCP program contributed to projects that linked to the long-term growth of EMC’s supply chain. For example, BCP partnered with EMC’s Social and Environmental Responsibility (SER) program and a project team from Yale University to conduct a study on the impact of rare earth elements on electronic components. The study’s findings informed procurement planning for critical components of EMC’s products and advanced the integration of BCP into supply strategies.
Our Objectives for 2013
In a complex world where the interdependency among suppliers is increasing, the BCP program must be ever more vigilant in monitoring the supply chain. In 2013, we intend to gain even more insight into potential disruptions and refine our mitigation planning. This will require continuous coordination among multiple departments and across the globe. Interactions with suppliers will intensify as we engage in discussions over crisis management and faster emergency response. In addition, members of the BCP and Supply Chain Social and Environmental Responsibility programs will continue to collaborate on supplier risk assessment and education—bringing a holistic approach to both preventing and managing risk.