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Supply Chain Management And Logistics Risk
As supply chains grow in size and importance, your company will need to pay closer attention to production facilities around the world. What if a disaster forced a shut down at a critical plant thousands of miles from your headquarters? Do you have a process in place to deal with it?
You need to first of all establish procedures for each plant and for each possible type of disaster. This includes lower-tier suppliers too (your extended supply chain). Know how each plant interacts with the "grand plan" of your supply chain, as well as with other components of the supply chain. Not knowing this could surprise you with a "domino effect" where the loss of one plant shuts others down for lack of parts. Work with suppliers to educate them about your disaster plan. Conduct reviews with them. When you are building your plan, concentrate on recovery and alternatives.
Just what kinds of disasters are we planning for? You name it and it has probably happened somewhere in the world. We know, of course, about natural disasters: hurricanes, tornadoes, floods, snow. Add to this list terrorist attacks, health epidemics, theft (physical or data), all the way to pirates capturing your ship.
You will need to know anything and everything about what is happening wherever you have a component in your supply chain. Remember that the weakest link brings down the supply chain. Yes, it is going to be tough to track on-going risks, analyze the impact and work to both recover the "down" facility and work around that facility with a contingency plan.
Your biggest challenges are distance and communications. It is not always just the factory. Infrastructure damage (roads, airports, railroads, harbors) can cripple you even if the factory is untouched. Even with contingency plans, a delay in responding to a crisis can really disrupt the whole supply chain. If you are aware of the crisis, good planning will pay off; but if you are not getting good feedback from the crisis zone, there is little you can do.
Another challenge is getting local input. This is especially important when the crisis is civil, military or political unrest. The folks on the ground can give you better input than TV broadcasters. In this case, you might take precautionary steps like activating a supplier in a neighboring country. Not everything can be predicted, events can catch everyone by surprise. But the majority of incidents facing the supply chain of any global company can be headed off, worked around or dealt with as long as you know the score.
Nothing against TV broadcasters, get as much information in hand from as many sources as possible. Electric utilities have led the way domestically for years. I visited the "Storm Center" at a large utility, in the Northeastern US. They watched not only how much snow was falling, but forest fires where they had utility poles, water levels above and below dams. They even watched snow level above their dams to make sure the summer water level would be adequate.
Again, information will make or break the supply chain. Last modified on Friday, 05 April 2013