BIOTECH SUPPLY
CHAIN ACADEMY
October 8-9, 2012
Crowne Plaza, Foster City, CA
Disaster Prevention and
Business Recovery: Are You
Ready?
Russell Owens CSP, ABCP, AVP
Senior Business Continuity
Specialist
The World Today
• “Speed, agility, efficiency, responsiveness and innovation all
remain critical, but equally important is a resilient supply chain.” –
Research firm, Garner
• “Everybody has moved to a leaner, single-sourcing, fewer-supplier
approach. Hey presto, what’s going to happen? You are going to
increase risk.” - Tim Lawrence, managing consultant at PA
Consulting
• The potential threat from natural disaster rose from 55% in 2010
to 81% in 2011 in a recent survey of 100 technology firms
• We live in an interconnected world where geographical disasters
and political unrest can impact businesses anytime, anywhere and
any place
Storage of API
Fill &
Finish
Transit
Supply Chain
In-house
QC
Manufacturing
of API
Packaging &
Labeling
Customer
Storage of finished
goods & Distribution
Supply Chain
Solutions
• Live with it
• Improve it
• Insure against it
The Do Nothing
Solution
Solutions – Live with It
• “Average fall in a share price following an announcement to the
market of a supply disruption was 10 per cent. And it takes the
price at least 60 days to recover from the fall.”
• Stock price movement with and without a Contingency Plan
Solutions – Improve It
• If the Procurement Head is not part of the C-level
suite, you need an ally there!
• What does your BCP cover? – Were you part of its
development?
• Are you involved in testing the organization’s
contingency plans?
Solutions – Improve It
• Split the sources/production up – This sounds like the simplest solution, but is it?
• A diverse supply base is effective, but initially more expensive,
strategy.
• Where is the other source/production located?
– Does this make the risk better or worse?
• Just In Time
– Vulnerable to supply chain shocks
– What are the savings and what are the costs?
Solutions – Improve It
• Look at your top 3 products – Map It Out
– What is the supply chain behind them
– Where are the risk nodes behind that chain?
• Supplier Relationship Management Program (SRM)
– Do you have one?
– Do you know what your suppliers SRM is for their suppliers?
• You want to be at the front of the queue from your suppliers if
you need them.
When Looking at Suppliers
• Do not look at their ability at a single point in time. Take a longer
look at the chain (5 years?)
• Map your exposures - Where are the pinch points that will effect
the chain.
1. Location
2. Transportation
3. 2nd and 3rd level suppliers
4. Other areas of concern
• Start the process when you are qualifying a supplier - Use of
audits and detailed questionnaires
Sourcing of Materials
• Who will source goods?
• Develop contingency plans for each element
– Determine level of stock – consider single source items or
items with extended lead times for delivery
– Where are they being warehoused
– Are there alternative materials or alternative vendors
• Master Service Agreement should spell out roles/responsibilities
• Pedigree
Contingency Plans
• Develop a plan with assigned responsibilities
• Identify, qualify and select third party service providers
• Negotiate contracts with each selected provider
• Consider the Regulators and other Government
requirements
• Stress test the formal plan
• Revisit your plan on a semi-annual or annual basis
Training and Testing
Update Plan
Completed
Plan
Testing
Training
Training
Update Plan
Testing
Solutions – Insure Against It
•
Insurance
– Do you have enough ?
– What does it actually cover ?
– Have you discussed your needs with your Risk Manager or
Insurance Buyer?
– 30 per cent of US companies do not have any cover for supply
chain disruption.
•
Most Business Interruption (BI) policies tend to cover
– First-tier suppliers on a named or unnamed basis
– Physical damage to that supplier (i.e. earthquake, flood or fire)
– Does it cover Extra Expense? What are the limitations?
Questions
Thank You
Chubb Group of Insurance Companies (“Chubb”) is the marketing name used to refer to
the insurance subsidiaries of The Chubb Corporation. For a list of these subsidiaries,
please visit our website at www.chubb.com. Actual coverage is subject to the language of
the policies as issued. Chubb, Box 1615, Warren, NJ 07061-1615.
This document is advisory in nature. The information provided should not be relied on
as legal or insurance advice or a definitive statement of the law in any jurisdiction. For
such advice, an applicant, insured, listener or reader should consult their own legal
counsel or insurance consultant. No liability is assumed by reason of the information this
document contains. Whether or to what extent a particular loss is covered depends on the
facts and circumstances of the loss and the actual coverage of the policy as issued.
17
References & Additional
Resources
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Downey, E., Shea, T., & Kelleher, B. (2012). Beware the Weakest Link! Mitigating Supply
Chain Risk: Best Practices Risk Management and Risk Transfer Strategies. What's Your
BIO?, (p. 8).
Evans, J. (2011, 02 06). 4. Retrieved 08 30, 2012, from WSJ.com:
http://online.wsj.com/article/SB10001424052748703296604576005060742737534.html
?
Gammelgard, A. (2011, 05 19). 8. Retrieved 08 30, 2012, from aws arena solutions:
http://www-aws.arenasolutions.com/blog/post/managing-supply-chain-risk
Hale, T., & Moberg, C. R. (2005). Improving supply chain disaster preparedness A
decision process for secure site location. International Journal of Physical Distribution &
Logistics Management, 195.
Hookway, J., & Poon, A. (2011, 05). Crisis Tests Supply Chain's Weak Links. Retrieved 03
18, 2011, from The Wall Street Journal: http://online.wsj.com/article/
Snell, P. (2011, Summer). 10. Retrieved 06 28, 2012, from cpoagenda.com:
http://www.cpoagenda.com/current-issue/features/chain-reaction/
Walch, D. (n.d.). Planning for Supply Chain Continuity. Retrieved 08 30, 2012, from
disaster-resource.com: http://www.disaster-resource.com/articles/08exe_p24.shtml