24 June 2011 | Angeline Albert
Purchasers were told to strike a balance between reducing
costs and increasing supply chain risk at last night’s CPO Agenda Question Time debate
on disaster recovery.
A panel of four guest speakers, chaired by CPO Agenda editor Steve Bagshaw, told an audience of procurement
professionals gathered at the Royal Institute of British Architects (RIBA) that
the focus on achieving efficiencies must not be done at the expense of addressing
supply chain risks. They agreed that organisations must have business
continuity plans in place to better manage the impact of disasters.
Panellist Nick Wildgoose, global product
manager, supply chain at insurer Zurich Financial Services, said some problems had arisen as a
result of the move towards single sourcing, globalisation and a focus on lowest
cost and ‘just in time’. “Yes, we’re reducing costs in the short-term, but
aren’t we increasing risk over the long-term and isn’t there a balance to be struck?”
He urged purchasers to tell their CEOs that purchasing is not
just about cost savings. Fellow panellist Catherine Petersen, principal
consultant at SunGard Availability Services, which sponsored the event, agreed
that CEOs should be encouraged to invest in business continuity plans. She said:
“Lean [processes] doesn’t necessarily mean more resilient.”
Tom Rae, group director of procurement at NSG Group, which
includes glass manufacturer Pilkington, admitted the company’s suppliers had
been affected by last March’s tsunami in Japan. He said buyers must focus on
critical tier one suppliers and understand who they are because they can’t do
them all. “We’ve isolated 48 key global risks – supply risks,” he said.
He admitted it was difficult for suppliers to share
potential vulnerabilities, but his company had overcome this by stressing the
importance of their awareness and saying that not sharing such information
would mean the supplier would be put on their risk profile.
Wildgoose told the audience to check whether their
supplier’s manufacturing facilities are in earthquake or flood zones by asking
Rebecca Green, Accenture consultant in supply chain
practice, spoke of how companies’ fear of sharing information with competitors
may result in similar contingency plans that could exacerbate their efforts to
manage risk. In response, Petersen agreed that companies must collaborate to
ensure they don’t make the problem worse.
Audience member Guy Cullum, contingency planning officer at
the Royal Borough of Kensington and Chelsea, said more collaboration was key.
He told the panel that councils across London were currently working together
to effectively standardise business continuity plans.
☛ A video of the event will be available from Tuesday on SM's YouTube channel