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Public Sector Pension Strike and Supply Chain Continuity

The public sector pensions strike planned for Wednesday 30th November will undoubtedly highlight many Business Continuity issues for organisations across the UK.  In particular, businesses may experience significant staff absences due to school closures; exacerbated in some areas by localised suspension of public transport.  One of the biggest impacts though is the predicted severe disruption at Heathrow, and other airports, due to the lack of Border Agency staff.  The way that airports are being affected by disruption to a key supplier (who just happens to be a government monopoly) which, in turn, is affecting their customers (the airlines) is a powerful illustration of how disruption propagates up and down supply chains.

The Business Continuity Institute’s recent Supply Chain Resilience report confirms the importance of supply chain issues as a continuing source of disruption globally; explores where in the supply chain these disruptions originate; and what steps companies are taking to manage these risks.  The key findings in the report were that 85% of businesses experienced some form of supply chain disruption in the last year and that 40% of these disruptions originated beyond the immediate tier-one supplier.  Indeed nearly 10% of disruptions originated in tier-three suppliers or below, so the experience of the airlines, where disruption is caused by a problem with a supplier’s supplier, is surprisingly common.

In terms of mitigating supply chain risks, the BCI survey found that half of respondents asked for copies of suppliers’ BCM plans (roughly similar to previous surveys) and 26% claimed that they looked for certification to BS25999 (or equivalent, up from only 5% 2 years ago).  Perhaps more importantly, 51% of respondents report that they actively validate their key suppliers’ plans (up from 31% in 2009) by, for example, running workshops or exercises with them.  Other mitigation strategies that respondents have pursued include bringing an additional supplier on board (31%); changing suppliers (31%); in-sourcing activities (26%); or transferring some or all of the the risk by purchasing insurance (12%).