More than half of managers in a new global BSI study described their organizations’ supply-chain approach as largely reactive, while only 27% said they could act on the same day as a disruption. The findings point to a problem that a list of alternative suppliers cannot resolve on its own: making decisions quickly enough to keep operating.
BSI’s October 12 research announcement draws on more than 1,400 managers across supply chain, procurement, finance, operations and legal functions.
Some 54% characterized their approach as largely reactive. Slow or unclear approval processes prevented decisions for 44%, while only 33% reported complete visibility of supplier locations and geographical exposure.
The results describe respondents’ assessments, rather than an independent audit of every organization’s preparedness. BSI provides standards, assurance and advisory services, so it has a commercial interest in improving business resilience.
What supply-chain resilience involves
Supply-chain resilience is the ability to sustain or restore important activities when deliveries, production or supporting services are disrupted. It includes prevention, but also the ability to operate when prevention fails.
That makes it different from simply buying from the lowest-cost supplier or holding additional stock. A response may require purchasing, finance, production and customer-service teams to agree on priorities under time pressure.
A backup supplier’s name is only the beginning. The business must know whether that supplier has available capacity, meets product requirements and can deliver within the necessary period.
For a hypothetical manufacturer, an alternative component might fit physically but still require testing or customer approval. Discovering that requirement after the original supplier stops shipping could leave the factory waiting despite its documented backup arrangement.
Two suppliers can share the same vulnerability
Direct suppliers are often described as tier-one suppliers. Their suppliers sit further upstream, and a buyer may have much less information about them.
Two apparently independent vendors could depend on the same upstream factory or transport route. This is a possible source of shared exposure, not evidence that the firms in BSI’s survey had those particular arrangements.
Location information therefore matters beyond the address on an invoice. Businesses assessing a critical input may need to establish where it is made and which facilities, routes or services are essential to its delivery.
MBN’s reporting on port disruptions affecting inland manufacturers examines how transport problems can reach businesses located far from the original interruption.
The approval process is part of the response
Detecting a delayed shipment is useful only if someone can authorize a workable response. An operations team may identify replacement stock while finance is still deciding whether to approve its higher price.
In another hypothetical case, the team could obtain an expensive emergency delivery, but no one has authority to accept the charge before a booking deadline. The delay then arises inside the buyer’s organization.
A response plan can specify who makes that decision, the evidence required and the limit beyond which senior approval is needed. Those boundaries need to be understood before an incident, alongside arrangements for contacting decision-makers outside normal hours.
The US Small Business Administration’s business preparedness guidance recommends assessing specific vulnerabilities, tailoring a response plan and practicing it with staff. Its continuity advice also calls for identifying critical functions and evaluating recovery strategies.
More protection also has a cost
Extra inventory can provide time to respond, but it ties up money and may become obsolete. Maintaining multiple qualified suppliers can increase purchasing or testing costs. Emergency freight may preserve a customer order while eroding its margin.
These trade-offs mean that resilience cannot be judged by how many alternatives a business has recorded. The appropriate protection depends on the consequences of losing a particular input and the cost of maintaining a usable substitute.
As MBN’s explanation of cash shortages in profitable businesses describes, buying stock can absorb funds well before customers pay for finished goods.
A practical exercise can expose the problem before an actual interruption: choose one essential delivery, assume it stops and work through the next purchasing, production and customer decisions. The revealing question is whether an approved alternative can arrive before operations need it, rather than whether a backup document exists.
