How do you plan for the unimaginable? Can you anticipate and properly plan for once in a lifetime events like last year’s Icelandic volcano, and the earthquake and subsequent tsunami earlier this year in Japan? Probably not.
Instead of specific plans, supply chain organizations need to look at increased flexibility and modeling the capabilities of their entire network. Don’t get me wrong. Valuable lessons can be learned from looking at what went wrong during these crisis situations that impacted supply chains around the world. In addition, we need to understand our alternate sourcing options, and increasing the flexibility in physical distribution networks.
Earlier this year, ERP Analyst Michael Koploy of Software Advice analyzed the impact of the 2011 Tohoku earthquake and how several companies were able to overcome the challenges this horrific event brought in his post, The Post-Tsunami Supply Chain All-Stars | Who Recovered the Fastest and How?. Recently we published a podcast that highlights how Sigma-Aldrich, one of the world’s leading life sciences companies with more than 175,000 products and more than a million customers around the world, was able to overcome two challenges to its supply chain, the Icelandic volcano and changes to import rules during the China Exposition. The podcast, Dealing with Complexity, explores how Sigma-Aldrich was able to turn the complete grounding of flights over Europe into a non event and maintain exceptional customer service levels. You can also catch the full interview along with commentary from Gartner’s Noha Tohamy is the webcast, Manage Complexity in Your Supply Chain.
From the above examples, there are two leading reasons why companies succeed in the face of unforeseen disaster. First is preparation. You must understand your network, inside and out, and every trading partner (supplier & customer) relationship. Don’t just draw a map; look at the intersection of each relationship and its impact across the network. Second is technology. Underlying Sigma-Aldrich’s success is the use of advanced supply chain software that helps ensure the right product is available at the right time. Spreadsheets, full of conflicting and nonintegrated data, only help to prolong the pain and reduce flexibility when responding to disruptions. Worse yet, they could turn a minor supply chain disruption into a full-blown catastrophe as data is compiled, checked, rechecked, and then distributed.
The next time an unexpected event occurs, how do you think your network will fare? My hope is you will find it just a minor speed bump, one you are prepared for.
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