High Risks in Your Supply Chain that You May be Blind To

The benefits of outsourcing production processes or services to suppliers are many: it can provide a better product or service than you would be able to produce internally; it can increase your efficiency; it can allow you to focus on core areas; and, of course, it can reduce your overall costs. Meanwhile, it also creates additional risks companies may not be factoring into their own business formula for success.

Lack of transparency

Suppliers are often reluctant to share information they may see as proprietary or confidential but it’s essential that they give reasonable assurance that they have plans in place for business continuity and that they are regularly maintaining and testing these plans. Their process may include a wide scope of operational dependencies so it’s valid for regular assurance and audits from clients.
Sufficient monitoring and alerts of operational outliers or different-from-expected production or delivery is also a basic requirement. Many clients now require automatic monitoring and timely technical reports. If your organization is not already formally requiring this from your key suppliers, introduce it into your relationship. Conjoined tests and validation exercises are valid trust builders and can improve expectations and transparency in the vendor-client relationship.

Unclear contracts

Relationships with critical partners frequently begin with a trust or “handshake” agreement on delivering a small service with little risk but develop over time into a critical dependency. When contracts are not fully formed or re-addressed as the relationship matures, both parties can end

Secondary suppliers

It’s a global market and many of your suppliers have their own suppliers – around the globe. In fact, those that are delivering value to your suppliers may be receiving value from you or someone like you. It is a small world, afterall. The key is to understand relationships that are imperative to you and their dependencies. Are several of your vendors relying on the same supplier for a raw material? Do your vendors require the same level of standards you do from their partnerships? There are many layers of business these days and it’s difficult to see the supply chain clearly across several (perhaps as many as several dozen) variables. In short, you need to know your suppliers as well as you know your customers.

Quality control 

Don’t forget that because today’s global supply chains are so interdependent, the number of organizations that influence your product multiplies the complexity of product quality. Each organization carries their own process methodologies, operational policies and strategic initiatives. Each piece of these creates another layer of complexity. It’s easy for a small part to become obscure and the detail less defined, resulting in a poorer level of product. Clear service level agreements and carefully systematized audits are needed to set and maintain standards of quality.

In conclusion, many risks that come with supplier relationships can be minimized through establishing clear expectations early in the relationship and continuing to clarify those expectations throughout the working contract.

For more information: http://www.dcsplanning.com

Rivulets

Rivulets are those tiny droplets of water that join together and move in a common direction. After lots of movement over time these little streams can really impact their environment  in significant ways. They begin to shape valleys and eventually build canyons. We have rivulets in our lives and it is my sincere belief we have rivulets in our businesses.  They are the little behaviors that eventually tip into culture and build our character and legacy.

Business rivulets start with people.  Managers leading encouraging, motivating little streams to run in certain paths.  Perhaps invisible at first, over time erosion is clear. What does this have to do with business continuity?  Everything.  Rivulets form shape of your resilience.  Day after day they reinforce or degrade direction, efficiency and speed.  Contingencies are initially built-in as the path of least resistance but leaders can design them to create value and build character.  What canyons are your rivulets building?

See more at: http://www.dcsplanning.com

Business Value Balance

Given that you agree with the recent post on every business having the same four core values . . . let’s continue our discussion.

Here’s a diagram for visualization: Business Value Balance.  Each operational value exists in a spectrum (generally from happiest to least happy).  Depending on the current score for each value on their respective spectrum, business is probably good.  Referring to the chart, you can see the business as the core, four-pointed star.  When the staff is happy, the customers are happy, the business is generally likable and its making a profit the business is sustainable.

There’s another star, too:  a red, eight-pointed star.  The eight-pointed star is the zone of risk tolerance. If you chart the scores of the four requirements for sustainability within the level of tolerance, it’s holding steady. If the level of value isn’t meeting or exceeding the least tolerable level, then its a problem.  Simple enough.  When one or more of the scores exceeds the level of tolerance, the business will naturally look for ways to move back toward a balance.

HERE’s THE CATCH: How the business finds its way to pull one score back to center could happen at the cost of another value.  And, if no one’s managing the balancing act, it will be at the cost of another value.  They’re all interrelated so they will all be effected.

If you don’t have plans to deal with keeping the four basic core values in balance, business ends up looking chaotic.  It is constantly in flux, always pulling and pushing at itself.  Costing the happiness of staff, the happiness of clients, likability and profit.  This diminishes sustainability and resilience.

Next blog: keeping the business values at the center of your continuity program.

What do you think?  Do you agree?  Disagree?  Case studies?

 See more at: http://www.dcsplanning.com

Operational Risk now OCC’s top concern

Operational risk has eclipsed credit risk as national banks’ chief safety and soundness challenge, Comptroller of Currency Thomas Curry told the Exchequer Club in Washington, D.C., last week.

Operational risk – the risk of loss due to failures of people, processes, systems and external events – is “high and increasing,” Curry said.  He cited flawed risk models, lack of adequate controls over third party vendors and anti-money laundering efficiencies as some examples of operational risk.

“[A]s banks and thrifts face greater resource constraints and higher compliance costs, they may feel greater pressure to economize on systems and processes in order to enhance their income and operating economies …,” Curry said. “All institutions … must resist the temptation to under-invest in the systems and controls they need to prevent greater risk and larger losses in the future.”

He emphasized the risk of operational failure is embedded in every activity and product – from a bank’s processing, accounting and information systems to the implementation of its credit risk management procedures.

“No issues look larger today than operational risk in all its dimensions, the manner in which all risks interact, and the importance of managing those risks in an integrated fashion across the entire enterprise,” Curry said. “These themes are a supervisory priority for us at the OCC today and they should similarly command the attention of the industry.”

 See more at: http://www.dcsplanning.com

How Excellent Companies Avoid Dumb Things – 12 Principles

I just finished an excellent book on driving change in business: Neil Smith’s “How Excellent Companies Avoid Dumb Things”

Here’s the 12 principles that cut through the barriers:

1. The CEO must personally lead and support and change process carried out across the entire organization and a majority of senior management must also support it.
2. The entire organization must be engaged in the change process.
3. The project must be guided by “stars” who are willing to change the status quo.
4. There must be no up-front targets for the company as a whole or the individual departments within it.
5. Those who will implement the idea must own the idea.
6. It must be easy to put ideas into the change process but hard to remove them.
7. Consideration of ideas must be based on facts and analysis, not opinion.
8. Consensus must be built.
9. There must be a focus on increasing revenue, not just reducing expenses.
10. The change process must not disrupt normal business.
11. Implementation must be nothing less than 100 percent.
12. The change process must be about culture change, not just a completed project.

Smith is right, constructive change that you want to see in your business is going to begin at the top and must be measured and deliberate.  Don’t mistake success for luck.  It’s not going to come easy!

See more at: http://www.dcsplanning.com

10 Simple Planning Actions to Increase Your Consistency of Exceeding Customer Expectations

Many executives ask themselves: “I know the basics about critical processes and mission-critical systems but what can I do to really make a difference in our ability to consistently exceed our customer’s expectations?”

 One way is to focus on increasing your business value and to sustain that value regardless of expected or unexpected circumstances. Below are 10 planning actions that you can take to support your mission critical value proposition.

10. Don’t be satisfied with a computer backup plan.  When your clients ask what’s the #1 reason they should use your company, do you say it’s your technology?  Probably not.  Why are you relying on technology to save you in a disaster?

9. Ask questions.  What are your employees doing in their personal lives for emergency readiness?  What are their concerns?  How can you help them?

8. Talk about operational risk and continuity management in business strategy meetings.  Talking is the first step to integrating it into the corporate culture.

7. Don’t count on vendors to pick up your slack in an emergency.  If it’s not written into your contract don’t put it in your plan.  Even then, always have a backup plan.

6. Know when to say there’s a problem.  Chances are you’re not going to be the one to first notice something is wrong.  If you are ignoring business deficiencies, others are too.

5. Know your emergency response plan.  Every natural hazard has a professional group that monitors it and knows how to respond.  The response plans are usually free online.  Get a good plan for the basic natural disasters in your area.  Keep it simple and your bases covered.

4. Don’t focus on the fear.  It’s easy to look at the unlimited disaster scenarios and get overwhelmed.  Instead look at what’s really important – a strong business plan.

3. Make a list of what is really important to your business.  Keep it short – not more than ten points (tops!).  Share it with everyone – your boss, your employees, your clients, your partners.

2. Build relationships with three key responders.  This could be your local police department or a criticalvendor.  The point is being on a first name basis with the person who has the answers you’re going to need during your emergency.

1. Create a solid employeecommunications plan and test it quarterly or more often.  People are your greatest asset; know how to connect with them.  Set standards and make them clear.

Still unsure or need help developing a road map to make your path simple?  We’re here for you.  Call now for a free consultation.    888-297-PLAN

See more at: http://www.dcsplanning.com

A Case Study in backing up data . . . .

We recently formed a relationship to manage the continuity program for a new client. At the start of the discovery phase, we had a hearty discussion about backup practices.  The new client used a well-known and reputable local data backup provider but had not thoroughly fleshed out the agreement or contractual obligations with them. Though our client was very confident in the services they were receiving, after reviewing the contract we were still uncertain how the provider supported testing or recovery of the backup data.

With reservations, but in response to our urging, the client contacted their supplier and, after several weeks and many discussions with varying levels of management – leading up to the owner – he found that, while they were backing up a great deal of data, the backup files were wrong for their core processing system to start recovery.  In fact, key files they would absolutely need during any recovery procedure were not getting backed up at all because they labeled them as “backup files” – not required for critical processing during usual business.  The backup system was simply filtering them out.  Clearly we were not concerned with business as usual!

Though our client had previously felt very sure of their recovery capabilities and had, for several years, paid a first-class disaster recovery provider to back their data up, the system had never been analyzed to recognize its clear flaws.  While the provider was technically holding up their end of the contract, our client would never have been able to recover from any data loss impacting their core system.  Because of a few simple questions and conversations with the back up and core process vendors, this client now has a better sense of certainty with evidence to prove his recovery capabilities!

See more at: http://www.dcsplanning.com

Not just Surviving – THRIVING!

Continuity management has long been tied to disaster planning and crisis response as fundamental to emergency planning but the reality is: If you’re just practicing business continuity to survive you’re never going to get much out of it.

The key to effective value creation from continuity management is a strategy that builds on how the day-to-day business is designed to create value. Today’s global market puts us all in crisis. Corporate directors are in jail. Cyber terrorists can easily hide across borders around world yet still access information kept locked away. States and countries declare bankruptcy. Instability is everywhere.
Businesses are so interdependent on one another that supply chain and technology are complex grey zones of value and accountability. The bottom line is the business needs to create value to survive. Maybe value means money, maybe it’s customer satisfaction or maybe it’s serving its nonprofit goal. Regardless, the creation of that value must be the crux of your resilience plans.

One of the most common misconceptions of business continuity planning is that it starts with a disaster and in a lucky world no one would need a plan. Luck favors the prepared. A business with a healthy continuity management program doesn’t just survive crisis; it thrives daily. The reality of the business world is that every day is more complex and risk loaded. In order to work toward corporate maturity and institutionalization of the systems that create value you have to structure and live your plan.

See more at: http://www.dcsplanning.com

Understanding Climate Change to Build Sustainable Small Businesses

Business readiness is essential to increase one’s chances of business survival. Ensuring a business is ready for any threat includes preparing for extreme weather. According to a recent survey by AXA Group insurance three out of four respondents believe future climate will become more extreme more often, while only five percent believe the weather will become calmer. 88% of the respondents believe that it is possible to limit the consequences of climate change.  Understanding how climate change might impact your business is essential to making a preparation plan and having it ready to implement when necessary.  

As small businesses are integral to any economy, it is imperative that they develop independent and complementary programs across their industry to stay competitive and afloat in tomorrow’s shifting climates. Since all economies are dependent on this vulnerable sector, development of strong and actionable  response plans is essential to national and global stability.

Recent examples of climate disaster include Hurricane Sandy, the typhoon that precipitated the Fukushima Nuclear Disaster, and the many F5 tornadoes in central Oklahoma. Business Continuity Consulting Oklahoma lighting more severe and frequent climate variations, businesses will need to re-assess and re-engineer their existing disaster risk management practices. The greater and more pronounced the climate change, the greater the disruption to product and service creation and delivery. Unlike larger organizations that tend to adapt to recurrent disruptions, small organizations cannot devote as many resources as frequently. Thus, small organizations must learn how to plan and implement climate change adaptation plans more efficiently and fluidly.

Developing rapid response and implementation plans for increased and more severe climate change are beneficial not just for climate change. Having a plan in place and ready to execute helps small businesses respond to and minimize damages in response to many threats. The same plan that helps small businesses respond to natural disasters can help businesses become profitable by offering technology that helps consumers and other businesses work through a disaster toolkit

There are many things a new or existing climate change response plan can benefit from. Taking into account new weather predictions, business survival plans should implement the following steps:

1. Create a plan:  Developing a plan is essential to know what to do beforehand. When an emergency is imminent, there will only be time for execution.             
2. Insurance:  What is and what is not covered. Based on the organization’s budget, assets, and an assessment of what needs to be covered will help determine the best type of insurance policy.
3. Weatherproofing:  What aspects of the business can and cannot sustain a natural disaster. Looking at purchasing products that come weather-proofed and what existing fixtures need to be weather-proofed is essential to respond effectively to future weather events.       
4. Data backup:  Developing a system to ensure all data is safe in case of a natural disaster. This can include data virtual or site backup.

Each organization has different needs and goals. Therefore, climate change response plans must be individualized for each organization's needs and future goals. While many organizations have planned for short-term needs, planning for long-term needs, in light of rapidly changing weather and the increased frequency of weather disasters necessitates long-term planning. Along with planning, organizations that are able to adapt efficiently will help their organizations survive and thrive despite any emergency, weather or otherwise. More info visit on http://www.dcsplanning.com