Perspective beyond continuity planning - a value chain approach (v4.0 - 4 january 2012)

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The 2011 monsoon season marked the worst flooding in more than 50 years, leading to the disruption of millions of lives and the closure of thousands of businesses. The Thai Government was predictably ineffective in coordinating a response to the short-term emergency and has yet to fully implement long-term preventive actions. This has left the business community largely on its own; given how recent experiences bias expectations the question of how to effectively prepare for the long-term is of particular importance.
Perspective >> Beyond Continuity Planning – A Value Chain Approach take a look at how leading organizations are actively integrating Value Chain Continuity Planning into their day-to-day activities while seeking to fortify their value proposition for customers

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Perspective beyond continuity planning - a value chain approach (v4.0 - 4 january 2012)

  1. 1. Perspective >>Beyond Continuity Planning – AValue Chain Approach Foundation Consulting Bangkok ▪ Hong Kong ▪ Stamford
  2. 2. DisclaimersThe information contained in this document is the proprietary and exclusive property ofFoundation Consulting except as otherwise indicated. No part of this document, in whole orin part, may be reproduced, stored, transmitted, or used for design purposes without theprior written permission.This document is provided for informational purposes only. Foundation Consulting makesno representation or warranties with respect to the contents or use of this document, andspecifically disclaims any expressed or implied warranties or usefulness for any particularpurpose of this publication. Foundation Consulting reserves the right to change or revise thisdocument at any time.Privacy InformationThis document may contain information of a sensitive nature. This information should notbe given to persons other than those who are involved in TH-158 or who will becomeinvolved during its lifecycle.TrademarksCopyright 2012 Foundation ConsultingAll rights reserved.Foundation Consulting, its logo, and Grow Sales, Grow Profits, Grow People as well as WeLove Challenges! We Love What We Do! We Deliver Results! are trademarks of FoundationConsulting.The contents of this document are the exclusive property of Foundation Consulting and areprotected by international copyright laws. No part of this document may be reproduced,photocopied, stored on a retrieval system, or transmitted without the prior written consentof Foundation Consulting.This document may reference trademarks owned by others. The use of such trademarks isnot an assertion of ownership of such trademarks by Foundation Consulting and is notintended to represent or imply the existence of an association between FoundationConsulting and the lawful owners of such trademarks.This document is produced by consultants at Foundation Consulting for informationalpurposes. If you require advice or further details on any matters referred to, please contactyour Foundation Consulting representative.Foundation Consulting Private and Confidential Distribution Subject to Copyright
  3. 3. Version History REVISION CHART Version Author(s) Description of Version Date Completed1.0 GMT/MW/DA First Draft 21 December 20112.0 GMT/MW/DA Second Draft 26 December 20113.0 GMT/MW/DA Third Draft 29 December 20114.0 GMT/MW/DA Final Version 4 January 2012 Foundation Consulting Private and Confidential Distribution Subject to Copyright
  4. 4. Document OwnerThe primary contact for questions regarding this document is:Author: Gregory M. Thomas, Mike Williams, Duangporn AkkaravivatProject Name:Phone:Email:Document ApprovalDocument Name: Perspective >> Beyond Continuity Planning – A Value Chain ApproachPublication Date: 4 January 2012Prepared by: Duangporn AkkaravivatFoundation Consulting Private and Confidential Distribution Subject to Copyright
  5. 5. Table of ContentsIntroduction 5Value Chain Continuity 6 Stakeholder Involvement 7 Distribution Models 7 Employee Support Programs 8 Coordination of Activities 8Conclusion 8Foundation Consulting Private and Confidential Distribution Subject to Copyright
  6. 6. IntroductionThe 2011 monsoon season marked the worst flooding in more than 50 years, leading to thedisruption of millions of lives and the closure of thousands of businesses. The Thai Government waspredictably ineffective in coordinating a response to the short-term emergency and has yet to fullyimplement long-term preventive actions. This has left the business community largely on its own;given how recent experiences bias expectations the question of how to effectively prepare for thelong-term is of particular importance.While much has been written on crisis management, this view is reactive. Organizations who haveimplemented effective Value Chain Continuity Plans were in the best position to support customersand gain an advantage over their competition.What can business leaders do? Based on our research, leading organizations are taking a 360˚ viewand have successfully implemented Value Chain Continuity. Fitting the Pieces Together 5Foundation Consulting Private and Confidential Distribution Subject to Copyright
  7. 7. Value Chain ContinuityRecent events have affected customers and suppliers with the resulting disruptions leading to acomplete failure to deliver the right goods or services at the right time for the right price. Theimpact on cash cycles could prove catastrophic especially as the frequency of what was previouslycategorized as a 1 in 30 occurrence increases in Thailand’s Central Region.The lesson learned is that leading organizations integrate with Suppliers and Customers throughValue Chain Continuity Plans to ensure that value added goods and services are available whenneeded. By taking this approach leading organizations can lessen the impact of potential blackswans by assessing:  Predictability of events (if/then),  Limits to the events impact,  Countermeasures to prevent cascading failure,  Errors in reasoning that lead to a sense of false security,and integrating this information into a 360˚ view of the value their organizations offer to customers.In addition to ensuring that all aspects of the plan are SMART, the plan should also address:  Delegation of responsibilities with clear chain of command.  Information sharing, storage & recovery that utilizes the all available technologies.  Site protection and/or relocation.  Extended enterprise capital & insurance requirements.Leading organizations not only demand the active support of suppliers but are also more closelyintegrated with customers. In this way, leading organizations are positioned to win market share ata time when their competition is ill-prepared to withstand the crisis.Aspects of Value Chain Continuity include:  Stakeholder Involvement.  Distribution Models (including relocation & logistics support.)  Employee Support Programs.  Coordination of Activities. 6Foundation Consulting Private and Confidential Distribution Subject to Copyright
  8. 8. Stakeholder InvolvementLeading organizations actively include extended enterprise stakeholders not only in thedevelopment of the plan but also in its implementation. For these organizations StakeholderInvolvement is crucial to overcoming crises as it creates a two-way platform to capitalize onopportunities before the competition.Distribution ModelsThe floods stretched fulfillment systems to the brink of collapse and in some cases shut down partsof the local (consumer products) and global economies (hard disk drive, auto parts). The stressesaffected organizations in different ways, from the forced relocation of Centralized DistributionCenters to the suspension of operations to simply rerouting to secondary or tertiary sites.One outcome of the recent crisis is that leading organizations are rethinking their distributionmodels and in some cases will be decentralizing to a certain extent by realigning to where theircustomer base actual is. While Bangkok and the surrounding provinces represent the largest marketin Thailand, second level cities are actually growing faster than Bangkok. Ultimately,decentralization will reduce risk as the major road and rail routes to the north and northeast fromBangkok are in a flood plain. Increase in the number of employed persons in municipal areas with > 15k montly income between 2002 and 2009 3,748 2,897 2002 Bangkok Vicinities Other Provinces 2009 Source – Thailand Macro Economic Briefing (Suthiwart-Narueput, S) 7Foundation Consulting Private and Confidential Distribution Subject to Copyright
  9. 9. While revised distribution models will depend on customer requirements it would appear thatseveral trends are emerging, including:  Hub and spoke model.  Higher reliance on VMI to ensure availability & diversify risk.  Integration with key customers to pool resources.  Increased reliance on 3rd party distribution partners.  Supply base diversification with alternative sites approved in advance.Employee Support ProgramsMost business leaders agree that people are the most important asset of their organization. Onebest practice observed during the crisis was the continued payment of employees even when thework site was closed. While this commitment to employees during a crisis is laudable, it should notstop there. Leading organizations look for inventive ways to utilize their idled employees for thebenefit of the community. However Corporate Social Responsibility only goes so far and cannot takethe place of good business practices. By recognizing the value in having comprehensive EmployeeSupport Programs in place, leading organizations look beyond direct financial assistance to includeinsurance options, access to funding, as well as setting up a network to educate employees on howto deal with potential risks and providing logistical support in times of need.Coordination of ActivitiesNot unlike most governments, the Thai Government proved incapable of effectively coordinatingactivities in a timely manner; unfortunately, the private sector fared only slightly better. From avalue chain perspective, leading organizations take a 360˚ view to ensure value for customers in thetoughest of operating environments. By coordinating activities with key suppliers and key customersorganizations can pool resources, reduce waste, and achieve effective scale to overcome challenges.ConclusionLeading organizations are actively integrating Value Chain Continuity Planning into their day-to-dayactivities while seeking to fortify their value proposition for customers. This short-list of bestpractices can easily be expanded depending on the specifics of the organization in question. Thenext step for leaders is to begin thinking beyond continuity planning in a linear fashion and seekopportunities to integrate suppliers & customers into an expanded Value Chain Continuity Plan.Through this approach leaders can recognize and overcome potential crises and ensure that theirorganization is well positioned as a market leader. 8Foundation Consulting Private and Confidential Distribution Subject to Copyright
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  11. 11. About Foundation ConsultingWe love challenges! We love what we do!Our team has helped more than 140 companies in the Asia-Pacific Region boost organizationalperformance and alignment, resulting in sales growth of up to 300% and increasing profits bymillions of dollars.We know the difference between strategy and implementation. We cut through bureaucracy,improve productivity, and strengthen the value chain. We deliver results.Who We Work WithWe work with growth companies and our knowledge covers the worlds major industries and todaysmost crucial business issues. Our broad range of expertise and straight forward approach ensuresthat we deliver unique adaptive solutions to your toughest challenges.What We DoWe help clients to Grow Sales, Grow Profits, and Grow People!How We Do ItOur approach, W.I.S.E., is simple yet scientific and leads to identifying the needs of all stakeholdersand crafting a specific yet sustainable plan that delivers results through an adaptive, straightforwardapproach that cuts through the bureaucracy, improves productivity, and strengthens the value chain.Foundation Consulting Private and Confidential Distribution Subject to Copyright
  12. 12. Bangkok OfficeThe Offices at CentralWorld29th Floor999/9 Rama I RoadPathumwan, Bangkok 10330Kingdom of ThailandTel: +66 (2) 207-2392Fax: +66 (2) 207-2626Hong Kong OfficeTwo International Finance Centre19th Floor8 Finance StreetCentral, Hong Kong SARTel: +852 8191 5948Fax: +852 3015 9336Stamford OfficeSoundview PlazaSuite 7001266 East Main StreetStamford, CT 06902United States of AmericaTel: +1 (203) 285-6701Fax: +1 (203) 907-1933www.fc-asia.comwww.fc-america.com Consider the environment© 2012 Foundation ConsultingAll Rights Reserved Foundation Consulting Private and Confidential Distribution Subject to Copyright

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