Surviving Supply Chain Disasters

Executives believe that threats to their supply chains are on the rise.


The good news is that companies looking to adopt a more proactive approach to disaster-proofing their supply chains probably have many of the required tools already at their disposal. "It's not as if a whole new set of decisions around technology or innovation need to be made to deal with a possible natural disaster," says Greg Johnsen, executive vice president and cofounder of GT Nexus, an Alameda, CA-based on-demand global trade and logistics portal.

In fact, Johnsen says, companies should think of disaster response in the same way that they think of the supply chain issues that confront them every day, such as supply constraints or demand spikes. "The technologies or innovations that are applied to disaster-proofing a supply chain are the same as you would use to have a more resilient supply chain or to address everyday commercial issues," he says.

For instance, many companies are putting in place real-time supply chain visibility systems that have dual applicability in non-disaster and disaster situations. A retailer that hits a demand spike as a result of a successful promotion would want to have visibility into how much inventory is incoming and whether that same inventory exists in other supply chain lines and could be redirected to meet the increased demand. That same retailer could face a natural disaster scenario that results in problems at a major port.

In this case, the retailer would want to assess very quickly the impact of port delays on its distribution network. "Global visibility, enabled by an 'all-seeing' technology platform, is the solution for dealing with both those circumstances," Johnsen says.

Restaurant chain Subway provides an example of a company that is finding its efforts to improve the business can have payoffs when it comes to handling unplanned events. Subway has deployed a foodservice management solution from Instill that allows its network of 60 suppliers, more than 200 suppliers' plants, some 20,000 restaurants and eight distribution centers to collaborate on, track and optimize the flow of goods through the supply chain. The company has estimated it is saving more than $1 million annually thanks to the efficiencies enabled by the solution.

But the company also can leverage the system to rapidly identify trends and potential issues with, for example, product quality before they can escalate beyond a localized level. The Instill solution provides a central database to capture product data all the way through the supply chain, so that problems can be traced to their source and quickly resolved collaboratively with partners regardless of the source of the issue.

Supply chain planning and network design also have a place in enabling both more efficient overall supply chain operations and a solid disaster-response strategy, according to Jim Caudill, vice president of solutions with supply chain solution provider i2 Technologies, Dallas. Many companies, he says, already have been moving to accelerate the frequency with which they review their supply networks as part of their sales and operations planning (S&OP) process.

"We see our customers moving toward an incremental planning process, with iterative changes to the plan as the execution process advances," Caudill explains. "The key here is shortening the cycle time between planning iterations. And then, when some disruption occurs, you can fall back on this process very quickly to respond rapidly in the most appropriate way."

The idea, in other words, is to build a process for planning "on the fly," when necessary, to respond to changes, regardless of the cause to those changes.

Jerry Hill, vice president for industry consulting at solution provider Teradata, a provider of enterprise data warehousing and analytical solutions in Dayton, OH, believes that a rapid response strategy must be supported by best practice data management techniques and an underlying data infrastructure that can reduce the latency of data that executives have at their disposal when they are facing a supply chain disruption.

"When a 'situation' arises, you should be able to turn to your data warehouse and craft queries very quickly so that you can get detailed information to assess the impact and put it into the context of your overall business," Hill says. The goal, he continues, is to enable a supply chain executive to have a decision-making foundation that rises above the level of "gut reaction," that is, to turn disaster response into more of a science than an art.

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