Business Continuity Planning in a Large Retail Supply Chain - Research Paper Example

Business Continuity Planning in a Large Retail Supply Chain Purpose of the Paper: I am doing my research paper on retail supply chains because I have worked in retail sales for about fifteen years. This has given me a chance to understand the nature of the retail supply chain environment. Moreover, it has enabled me to appreciate the role of each stakeholder in this environment. I am also currently working for a larger retail company as a receiving manager. Because of my current position problems with the supply chain can directly affect my work load and I want to know more about a retail supply chain and how the supply chain connections can be protected. This paper will be geared towards professionals in both business continuity and retail management. I would like the people in these professions to be able to learn from my paper the need for a better BCP for protecting a company’s supply chain. Opening Statement: Business continuity planning in large retail supply chains is not thorough enough. Large retailers that depend on outsourced supply chains are not managing their supplier risks. The Marsh Supply Chain Survey results show that no one is managing their supply chain risks very well. In fact only about 33% of them are even managing their risks moderately effectively (Hiles, 2011). According to Hiles (2011), supply chain is an all inclusive term that constitutes the management of both downstream and upstream relations with clients and suppliers. This is desirable because it allows for timely delivery of superior client value at a lesser cost. Certainly, this is sustainable because both parties benefit optimally and are able to sustain their wellbeing through time. In order to protect this process, businesses have to look at the end-to-end supply chain process and build a Business Continuity Plan (BCP) that covers all parts of it. Many things can affect a business’s supply chain. In fact, the recent turbulence in today’s market has helped to increase the vulnerabilities of supply chains. Other things affecting businesses is the fact that they have chosen to run leaner by outsourcing different parts of their business. By running a leaner business, businesses can “enhance their operational effectiveness, which essentially improves firm performance and competitiveness” (Liu, Lin, Hayes, 2010, p222). However if a business fails to manage the risks associated with running leaner than they will lose all of these benefits. By not managing their supply chain risks, large retail companies are leaving themselves vulnerable to possible business failure. Hypothesis: This research is informed and guided by distinct assumptions. To begin with, the study presumes that both upstream suppliers and downstream, consumers directly affect the continuity of the retail supply chain. Large retailers should therefore clearly analyze their contribution to business failure or success and make necessary and timely interventions. The study is also based on the assumption that current large retailers are faced with complex risks that stem from the relationships that they establish and maintain at various levels. Further, it presumes that inability to manage the risks effectively not only reduces efficiency but also increases the susceptibility of retailers to failure. Finally, this study presumes that relevant interventions can only be identified addressed in a timely manner through continued monitoring. From this point of view, business continuity plans are therefore vitally important. Discussion of Findings: As indicated earlier, retail supply chains are increasingly becoming more and more complex. These can be attributed to the increasing complexity of the relative relationships. Globalization trends have compelled businesses to explore various options in a bid to maintain a competitive edge. In his study, Hotchkiss (2010) found out that the complexity of the business environment has diversified the risks that businesses are exposed to. As such, they are faced with the responsibility to developing strategic plans that would go a long way in countering relative negative implications. According to Graham (2006), retail supply chains are particularly at risk because of their exposure to a broad consumer base. In this respect, it is worth acknowledging that compare to the suppliers, retailers are more exposed to the consumers. Their relationships with the consumer base have a direct impact on the business. It is therefore vitally important that they develop continuity programs that are comprehensive. In his review, Osborne (2007) insists that relative plans should address diverse events as well as issues with potential reputational risk elements. In essence, these need to effectively address issues pertaining to employment practice accusation, product recalls, workplace violence and product tampering amongst other concerns (Graham, 2006). Elliot, Swartz and Herbane (2010) assert that retail supply chains are indeed growing more complex each day. The gradual complexity has direct effects on the respective chains and is likely to increase relative risks. Examples of risks that the retail supply chain grapples with include natural disasters, technological problems, loss of critical resources like manpower and so forth. The retail supply chain is also comprised of various stakeholders that play important roles in the wellbeing of the businesses. These range from third party suppliers and customers to business partners and service providers. The roles they play are integrated and intricate in nature. This implies that the role that a single party plays has direct impacts on the wellbeing of the other. In this respect, relative risks can have a series of negative reactions that can compromise the sustainability and wellbeing of the entire system. In his review, Hotchkiss (2010) believes that this supply chain is systemic in nature. Interactions and relationships are at the core of the functioning of retail supply chains. The inherent interactivity further exposes the supply chain to various risks. This is particularly so because common risks that stakeholders face at different stages are vary considerably. This implies that the effect that they have on the supply chain are equally varied. Harvard Business Essentials (2004) also contends that the current retail supply chain especially of larger organizations is vulnerable to various risks. In this regard, he posits that most retail operators increasingly prefer the low cost global sourcing strategy in the pursuit of their business goals and objectives. To remain competitive in the current business environment, Kumar and Chandra (2010) ascertain that most large scale retailers are opting for outsourcing. Comparatively, the relative functions tend to be less costly and greatly improve the performance as well as effectiveness of the supply chain. A classic example in this respect pertains to Information Technology functions such as data center operations, webhosting as well as application development. Other retail supply functions that are mostly outsourced include logistics and transportation. Although this is relatively cheap and economically rewarding, it cannot be disputed that the risks that it posses on the supply chain are equally immense. According to Kumar and Chandra (2010), global sourcing increases the degree of complexity of the associated risks. Put differently, the retail supply chain in this regard is likely to face more complex risks that stem from diverse environments that business entities source resources and assets from. In addition, global sourcing also increases the likelihood of the supply chain suffering from disruptions that are related to global threats such as terrorism, political instability and a poor regulatory environment. In his research, Osborne (2007) argues that the complexity of the retail supply chain of large retail business entities has detrimental effects to the wellbeing of the organization’s retail supply chain. In this respect, he posits that it is likely to complicate or and delay vital recovery efforts. For instance, communication delays are likely to culminate from cultural and language barriers or time zone differences. The impacts of these on the particular business are immense and greatly compromise the ability of the organization to sustain its operations. Besides the preceding effects, outsourcing practices reduce awareness as well as visibility of the risks during the process. This has adverse effects in the long run because it encourages accumulation of the respective risks. In addition, this practice encourages complication of the risks because they are not addressed in a timely and effective manner. Continued accumulation of risks according to Osborne (2007) is potentially damaging and probably reduces response to wide ranging risks in the case of a disaster. For this reason, it is vitally important for outsourcing to be monitored. This would allow for timely and effective management of relative risks. Business continuity plans provide the best platform through which supply chain risks can be monitored and documented accordingly (Elliot et al., 2010). Recent researches show that a significant percentage of supply chain managers prefer lean management processes in their efforts to reduce costs. Reduction of costs in this respect is attained through minimization of inventory and effective use of transportation assets. This has had positive impacts on the supply chain through reduction of supply disruptions and tolerance for error. Nonetheless, these have not been successful in completely eliminating disruptions. Business continuity plans in this regard need to be more comprehensive. This would ensure that the respective plans are reflective of the actual scenario on the ground. Ultimately, this would ensure that decisions that are made are based on informed thought and accurate statistics. In order to capture all these concerns, Hotchkiss (2010) indicates that all parties or stakeholders need to be actively involved. Collaboration in this respect would also ensure that effective prioritization is done and distinct recovery measures put in place accordingly. The business continuity plan also needs to capture the scope of the retail supply chain under review. This should be inclusive of information regarding communication processing and data management. It should ensure that all supportive networks as well as nodes are resilient. In its comprehensive review, Harvard Business Essentials (2004) found out that effective business continuity plans for retail supply chains need to underscore and detail the role of important suppliers as well as consumers. This would aid in accurate estimation of the negative impacts of any possible disruptions. To yield optimal results, analysis needs to be objective and should factor in the importance of this to business continuity. Equally important to the planning process would be information regarding the contribution of suppliers and consumers to the recovery of the supply chains in case of any disruption. In this respect, Graham (2006) believes that an integrated approach to problem resolution is always more sustainable and rewarding. Thus it is important to involve the contribution of all stakeholders as well as shareholders in this endeavor. Further, business continuity plans are also vital to a retail supply chain because they underscore specific ways through which the supply chain can build resilience in its logistic process. In essence, the aforementioned factors provide useful insights that can enhance effective planning for supply chain continuity as the retail level. Recommendations At this point, it cannot be disputed that effective planning for supply chain continuity is requisite for elimination of emergent as well as existent risks that compromise the success of the business. Apparently, retail supply chains face a host of problems that stem from outsourcing practices and the intricate relationships that they establish at different levels. To ensure optimal functioning, these risks should be identified and addressed in a timely and effective manner. Continuity business plans provide important information that can be used to pursue this good. It should however be acknowledged that for this to be effective, the continuity plans need to be comprehensive and conclusive. The following recommendations provide useful insights that large scale retailers can use in effecting this desirable state of affairs. Firstly, business professionals need to develop more comprehensive continuity plans that capture the complexity of the supply chain. This way, they can be able to identify possible interruptions in a timely manner. Relative information can allow them to make objective and accurate decisions too. Secondly, all parties should be involved in the development process. Likewise, this would ensure that the end product reflect all the concerns. Thirdly, it would be important for the business professionals to examine and determine the extent of the relationships that the supply chain has at different levels. This is important in determining the role of each party as well as their contribution to the wellbeing of the supply chain. Finally, the professionals should review their outsourcing practices and identity any shortcomings accordingly. As aforementioned, outsourcing has negative implications on the ability of the organization to cite and address any shortcomings. For optimal functioning of the retail supply chain, relevant authorities need to review this accordingly. Conclusion In sum, retail chain supply system is complex and shares intricate relations at different levels. As it has come out from the study, the relative relationships expose the supply chain to various risks that have the potential to undermine its entire wellbeing. Although outsourcing is one single most important approach to large retailers, it has the potential to undermine the ability of organizations to identify risks in a timely manner and address them effectively. Seemingly, effective business continuity plans need to be comprehensive and reflective of all the relative plans. This can be attained through various ways including active stakeholder participation. In conclusion, these instruments are elemental in addressing the risks that are faced by the retail supply chain in the current competitive environment. For this reason, they should be reviewed, evaluated and developed in line with the organizational needs. References Elliot, D. Swartz, E. & Herbane, B. (2010). Business continuity management: A crisis management approach. USA: Rutledge. Engle, P. (2011). The other side of lean. Industrial Engineer: IE, 43(7), 20. Graham, J. (2006). A risk management approach to business continuity: Aligning business continuity with corporate governance. USA: Rothstein Associates Harvard Business Essentials. (2004). Crisis management: Master the skills to prevent disasters. USA: Harvard Business School Hiles, A. (2011). The definitive handbook of business continuity management. (3 ed.). West Sussex, United Kingdom: John Wiley & Sons, Ltd. Hotchkiss, S. (2010). Business continuity management: In practice. London: British Computer Society Kumar, S., & Chandra, C. (2010). Supply Chain Disruption by Avian flu Pandemic for U.S. Companies: A Case Study. Transportation Journal. American Society Of Transportation & Logistics Inc, 49(4), 61-73. Liu, S., Lin, J., & Hayes, K. A. (2010). An agile and diversified supply chain: Reducing operational risks. Competitiveness Review, 20(3), 222-234. Osborne, A. (2007). Practical business continuity management: Top tips for effective, real world business continuity management. USA: HotHive Books Rice Jr, J. B. (2011). Only as a strong weakest link. Mechanical Engineering, 133(6), 2 6-31. Sharp, J. (2007).The route map to business continuity management: meeting the requirements of BS 25999. London: British Standards Institution. Read More