Disaster recovery, business continuity plans vital for supply chain management

     

After witnessing the catastrophic natural disasters that struck Japan and Thailand last year, more companies around the world are improving their supply chain management philosophies in order to better handle these occurrences. The events that struck the eastern hemisphere served as a lesson learning process for both the companies involved and those that witnessed it.

In today's world, organizations should understand that these types of situations can happen to any company, regardless of the industry in which it operates.

 

As a result, proper data loss prevention and disaster recovery plans are vital for the success of any business, according to an EBN report.

The effects of natural disasters can be devastating. Say an organization's manufacturing facility is taken out in a flood. If this were to happen, it may take the company years to get back on its feet. Additionally, the indirect effects can be just as disastrous. Wall Street analysts, for example, often reward companies that leverage effective supply chain management policies and avoid those that don't, the news source reported.

Business continuity plans should have disaster risk profile assessments. These measure a business' chances of being hindered by disasters, whether natural or manmade. Some of the metrics that go into these assessments include geographical location, the depth of sourcing products, diversity within the market and transportation methods and differentials from competitors, according to the report.

To begin making these profiles, organizations should map out their entire supply chain, from raw materials to end products. The lifecycles of each of these components are also major factors when a company is determining its disaster plan, the EBN report said. This is important because it will help a supply chain manager to decide whether or not to invest in new equipment or repair existing systems.

Some of the basics that should go into establishing a disaster plan include creating a potential second production site in a different geographical location, establishing multi-mode and route transportation methods, as well as building additional inventory caches in multiple regions, the news source reported.

According to AI Research, spending within the business continuity and disaster recovery market is expected to exceed $39 billion by 2015, indicating that supply chain managers around the world are done taking chances.