BCM Supply Chain Continuity & Third-Party Risk Management 1 — Questions and Answers
Question 1: What is the primary purpose of conducting a Business Impact Analysis (BIA) for the supply chain?
- To identify all suppliers globally
- To negotiate better pricing with suppliers
- To establish supplier performance metrics
- To quantify the impact of supplier disruptions on business operations (Correct answer)
Correct answer: To quantify the impact of supplier disruptions on business operations
A supply chain BIA quantifies the operational and financial impact of supplier disruptions, enabling organizations to prioritize critical supplier relationships and allocate recovery resources.
Question 2: Which term describes the maximum acceptable time a business can function without a critical supplier before suffering irreversible harm?
- Recovery Time Objective (RTO)
- Maximum Tolerable Period of Disruption (MTPD) (Correct answer)
- Recovery Point Objective (RPO)
- Minimum Business Continuity Objective (MBCO)
Correct answer: Maximum Tolerable Period of Disruption (MTPD)
MTPD defines the maximum time a business can operate without a critical supplier before experiencing consequences that cannot be overcome, setting the planning horizon for supplier continuity strategies.
Question 3: What does 'dual sourcing' mean in supply chain continuity planning?
- Using two shipping methods for all deliveries
- Maintaining two separate warehouses for critical inventory
- Qualifying two or more suppliers for the same critical component or service (Correct answer)
- Creating two versions of the supply chain continuity plan
Correct answer: Qualifying two or more suppliers for the same critical component or service
Dual sourcing involves qualifying multiple suppliers for critical inputs, ensuring business operations can continue if one supplier experiences a disruption by switching to the pre-qualified alternative.
Question 4: Which ISO standard specifically addresses supply chain security and resilience management systems?
- ISO 22301
- ISO 9001
- ISO 28000 (Correct answer)
- ISO 31000
Correct answer: ISO 28000
ISO 28000 specifies requirements for a security management system for the supply chain, providing a framework to manage supply chain security and resilience risks comprehensively.
Question 5: In supply chain BCM, what defines a 'Tier 1 supplier'?
- A supplier that directly provides goods or services to your organization (Correct answer)
- The highest-rated supplier based on quality scores
- A government-certified preferred supplier
- A supplier located within the same country as your organization
Correct answer: A supplier that directly provides goods or services to your organization
Tier 1 suppliers are those with a direct contractual relationship with your organization, providing goods or services directly rather than through intermediaries, making them the first layer of supply chain risk.
Question 6: What document should a critical supplier provide to demonstrate their BCM capability to your organization?
- Annual financial report
- Business Continuity Plan or Business Continuity Statement (Correct answer)
- ISO 9001 quality management certificate
- Environmental impact assessment
Correct answer: Business Continuity Plan or Business Continuity Statement
A supplier's Business Continuity Plan or Business Continuity Statement demonstrates their documented capability to maintain operations and service delivery during a disruption, providing assurance to dependent organizations.
Question 7: Which inventory strategy maintains buffer stock specifically to absorb supply chain disruption impacts?
- Just-in-Time (JIT) inventory
- Vendor Managed Inventory (VMI)
- Safety stock or strategic inventory (Correct answer)
- Cross-docking
Correct answer: Safety stock or strategic inventory
Safety stock (strategic inventory) provides a resilience buffer against supply chain disruptions by maintaining excess inventory of critical materials, allowing continued operations while alternative sourcing is secured.
BCM Supply Chain Continuity & Third-Party Risk Management 1
What is the primary purpose of conducting a Business Impact Analysis (BIA) for the supply chain?