By Mark Humphlett, Director, Industry Marketing, Infor
Recent environmental events like Hurricane Sandy, which swept through the East Coast in 2012, or the tsunami in Japan in 2011, have produced a ripple effect on the way companies operate in today’s global economy. Unexpected natural disasters combined with economic uncertainty have presented new challenges for manufacturers relying on suppliers around the globe to deliver materials and products on time.
During a time of crisis, not even the world’s largest or most robust companies are immune to the potential devastating effects caused by a supply chain disruption. Luckily, these disruptions can be minimized by taking the necessary steps to plan ahead and test alternative strategies in advance.
In today’s information age, all employees, from the shop floor all the way to the c-suite, need to understand and identify risk on a daily basis. By managing uncertainty, employees can be better prepared when disaster strikes.
Here are some examples of strategies organizations can implement to build resilience and agility into their supply processes:
Identify potential risks daily.
In order to have the greatest impact, risk management should have a daily presence in all divisions of an organization. For decision-makers to effectively identify and understand potential sources of risk, assessment should take place as part of standard operations, rather than exist as a separate function that might fail to address commonplace sources within the business.
Use technology to predict and analyze risks.
Technology allows companies to more accurately predict the most effective way to move products through their supply chain and simultaneously analyze potential sources of risk that could disrupt networks. By providing the agility to quickly compensate for variations in the business environment, technology helps prepare organizations for unplanned changes to sourcing or inventory, facilitating reduced costs and consistent customer service in the instance of an emergency.
Implement a business-wide process to ascertain risks.
Develop an established business process, like strong sales and operations planning, to consider the potential impact of risks and alternative supply chain scenarios to meet customer demand. An institutionalized planning process will serve as the foundation for pinpointing risks and their ability to influence revenue.
Test real-life scenarios to plan ahead.
Prepare for potential risks by modeling different scenarios using advanced supply chain tools. Ask yourself questions like: How would our network cope if a natural disaster shut down suppliers for several weeks? What would be the extent of the impact on our strategies, sales and profits? Could we identify alternate suppliers from different regions? Testing real-life scenarios in advance prepares organizations to answer these questions in the instance of an actual interruption to the supply chain.
Make the supply chain more agile.
Develop supply chain dexterity to decrease susceptibility to risks. Much like the fashion industry can quickly move a product from design to store after a shift in customer demand, businesses in other industries can prepare for unforeseen network interruptions by enabling more efficient response time to change.
Utilize the cloud
When power outages occur on site, access to programs and data required to make important decisions may not be accessible. Storing data in the cloud provides a safe alternative for employees both stranded from the office and on the road to utilize the information they need, when they need it.
While companies can’t predict what Mother Nature has in store, they can have a back-up plan for when supply chain disruptions do occur. From large companies to mom-and-pop shops, education and experimentation with alternative sources for supplies and delivery is essential for success during uncertain times.