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FOR IMMEDIATE RELEASE
Managing the Risk of Supply Chain Disruptions
Expecting the Unexpected - Response and Recovery Planning
Tempe, AZ, February 8, 2007 – Unexpected events and natural disasters have significant
impact on business operations, and the very nature of these tragedies have forever
changed how businesses plan for disruptions. In addition to all of the natural disasters
ranging from floods to flu pandemics, businesses are continuously planning for other
types of potentially devastating unnatural disasters that include war, terrorism,
power outages, industrial sabotage, and software virus attacks. In the recently
published CAPS Research report, "Business and Supply Chain Continuity", author,
George A. Zsidisin, Ph.D., C.P.M., Michigan State University, states that business
continuity plans include emergency response plans, which consist of detailed plans
for responding to an actual emergency, and business recovery plans, which describe
how the firm will recover as quickly as possible to sustaining operations.
Managing supply chain continuity has become even more important with the recent
intense focus on 'lean' business processes and supply chains. Across the globe,
businesses have found themselves facing a difficult question: How can we ensure
supply arrives on time, in the quality and quantity expected, while at the same
time enjoying the benefits of lean practices?
In the CAPS Research report, the author notes that it is difficult to justify the
efforts and investments involved in business continuity planning unless senior management
is fully engaged. These executives must commit resources to the process, use known
metrics for accountability, and provide guidance. Other basic principles of business
continuity planning include ongoing preparedness that requires briefings
on training, assessments of business and corporate goals, and security awareness;
risk assessments to ensure minimal impact on the supply chain; and speed and
responsiveness to minimize response and recovery times.
Another important component of the business and supply chain continuity plan is
building relationships with suppliers, but how involved should the purchasing firm
become in developing or managing suppliers' plans? This question is especially relevant
under the requirements of Sarbanes-Oxley (SOX) guidelines to communicate known risks.
In the end, supplier engagement, buy-in and enthusiasm are important for working
together to ensure business and supply chain continuity.
In a global sense, supply chains are becoming more complex and closely interlinked,
and disruptions are becoming more significant. Businesses are creating and managing
plans to ensure supply chain continuity to meet internal and external customer requirements
when the unexpected does occur.
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This report is based on a CAPS Research Critical Issues Event in Tempe, AZ. Critical
Issues Partnership Program Conferences come from our sponsors’ desire to bring subject-matter
experts (and those wanting information) together on a current crucial issue in supply,
in a one-day focused meeting, organized by CAPS Research and held at a sponsor company’s
site.
Note: To review the CAPS Research Critical Issues Report, "Business and Supply Chain
Continuity" click on the following link:
http://www.capsresearch.org/publications/pdfs-protected/cir012007.pdf
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CAPS Research is a nonprofit research organization founded in 1986 to provide leading
research to our strategic-minded corporate sponsors and to the public. Our mission
is to work in partnership with a global network of executives and academics for
the discovery and dissemination of strategic supply management knowledge and best
practices. CAPS Research is jointly sponsored by the W. P. Carey School of Business
at Arizona State University, and the Institute for Supply Management™.
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