One of the most powerful aspects of an asset-led, all-hazards approach is that it transcends traditional silos to focus on core service delivery, which can be applied to aspects of an organisation over time. This makes it far easier to prioritise and build capability in essential business units facing immediate disruption. Organisations can use a sprint-based approach to then uplift other areas at a manageable cadence, rather than trying to run a more daunting and resource intensive transformation of a whole business.

At Deloitte New Zealand, we have seen the success of taking this pragmatic approach, working with clients on supply chain and procurement as the tip of the spear.

Ben Davis, Critical Infrastructure Specialist at Deloitte Australia, says, “The adverse consequences of being at the end of global supply chains has become an issue of national importance. Both New Zealand and Australia sit at the extremity of complex and physically dispersed supply lines that continue to experience significant delays, shortages and cost escalations.”

Guy Finny, Associate Director at Deloitte New Zealand, adds, “New Zealand has a nation-building opportunity to enhance the resilience of our critical infrastructure. The government has recently tasked its officials with reviewing existing regulatory frameworks, recognising a need to ensure legislation is fit for purpose in the current operating environment.”

Recognising these trends, Deloitte drew from Australia’s recent experience with a newly mandated all-hazards framework to assist Transpower, the owner and operator of New Zealand’s national electricity grid, reviews and uplifts its supply chain management practices.

Transpower maintains a national asset base and is a critical enabler of New Zealand’s energy infrastructure. It has to be responsive to the changing dynamics of the New Zealand energy market, including a record number of requests in connecting renewable generation.

Rutger Keijser, Head of Risk and Assurance at Transpower, notes, “Transpower weathered the supply chain disruptions of recent years well. At the same time, we have witnessed levels of disruption we had not encountered before, and this pattern is unlikely to change any time soon. We want to make sure our organisational practices are appropriate for an increasingly volatile and disrupted operating environment.”

Any operating environment that has to perform in the face of adversity needs a framework that gives stakeholders a line of sight on the most critical things that could materially impact the organisation’s core functions.

In achieving that, Transpower and Deloitte applied an all-hazards methodology in evaluating supply chain management practices, focusing on critical assets, their interdependencies, and touchpoints throughout the organisation.

Assessing how the functions of key assets could be disrupted by material factors helped Transpower build on its existing practices. This was done by approaching resilience through a focus on critical components and the internal and external influences on those across the procurement process and along the supply chain.

Dan Robertson, Head of Procurement and Supply at Transpower, says, “Taking an asset-led approach was key in helping bring teams together to ensure supply chain considerations for our critical assets are appropriately factored across asset planning, project delivery, and operations. The approach helped identify areas of strength within the organisation, allowing us to build on that through greater knowledge sharing. While our supply chains held up well during the pandemic, the lessons learned from this review are helping us take steps to further improve our resilience.”

It is no surprise given the desire to uplift national security and resilience, that an all-hazards framework is at the center of whole of nation reforms targeting critical infrastructure in nearby Australia. Recent changes to the Security of Critical Infrastructure Act require responsible entities to create and operationalise a risk management program based on an extensive, asset-level lens.

Ben says, “The positive obligations introduced in Australia were not necessarily welcomed by industry, but after taking the time to work through them systematically and collaboratively, we’re seeing just how transformative a more holistic and asset-driven approach can be.”

Boards and executive leadership teams are facing a horizon where more proactive and informed decision-making is required for the due care and diligence associated with their fiduciary duties. Expectations are increasing around the foreseeability of risks, good governance and mitigation planning.