Developing business continuity strategies and embedding business continuity processes into an organization's procurement process can enhance the organization's ability to actively assess and monitor vendor capabilities
No one company can deliver end-to-end products and/or services in today's complex business environment. Therefore, most organizations have a supply chain that is a mix of competencies, from manufacturing to professional advisory services, and this has created critical supply chain interdependencies. Of paramount concern today is assuring supplier continuity capabilities. Simply having profiles of potential high-risk suppliers, while extremely important, is by itself not enough.
Developing business continuity strategies and embedding business continuity processes into an organization's procurement process can enhance the organization's ability to actively assess and monitor vendor capabilities. By creating a flexible framework for augmenting, retaining or shedding vendor competencies in order to assure supply chain integrity the organization can meet customer demand, customer expectations and generate consistent performance.
Four basic assumptions form the underlying premise for this article:
- Complexity: Companies today are complex, and their procurement processes are complex management systems operating within multiple networks
- Touchpoints: All of a company's touchpoints (downstream and upstream) within its networks must be considered to effectively evaluate risks, threats, hazards and vulnerabilities to determine the effects and consequences of degradation on the entire system
- Responsiveness: Actions at any given level within the network may be inadequate unless the entire network responds in kind
- Resource Constraints: Most levels and groups within the company, and the supply networks supporting the company, lack the resources and specialized skills to know what to do to maximize operational resilience within the network
The integration of vendor business continuity capability as part of the procurement process is becoming an integral part of company strategy. Effective business continuity strategies, like supply chain assurance, need to be designed. Integrating business continuity principles and concepts into a company's business portfolio planning process and at each stage of product/service lifecycle can provide opportunities to enhance the procurement process, allowing a company to deliver superior products and/or services solutions to its customers.
Touchpoints Internal and External
Identifying procurement touchpoints (internally and externally) needs to be one of the first steps in the process to assure that key continuity concerns are adequately addressed. Internal touchpoints may include any part of the organization that has direct and/or indirect interface with the procurement process, such as customer relationship/service touchpoints, strategic planning, quality assurance, operations, human resources, legal, audit, and, in some instances, the officers and board of directors of the enterprise.
Identifying external procurement touchpoints may seem simple, but when you begin to identify vendors you have to realize the components that allow the vendor to get its product or service to you are also touchpoints. Therefore, identifying external procurement touchpoints becomes more complex. In addition, due to the popularity of outsourcing today, vendors are also outsourcing, so a tiered approach to identifying external procurement touchpoints can facilitate organizing the process.
Vendor Continuity Capability
Developing a vendor continuity capabilities questionnaire is another way in which vendors and internal stakeholders can provide a basis for moving forward. However, it needs to be carefully thought through. You are, in essence, creating a legal document that could contain sensitive information and must be protected. Your organization could also be held liable for not taking action to mitigate potential losses because of the type of information that you will collect in order to assess vendor continuity capabilities.