Crisis Management
In the Supply Chain
Supply Chain Leaders
Widen Performance Gap
Whether caused by weather, pandemics or
financial meltdowns, every supply chain will
experience disruptive events, says Phil
Renaud, vice president of risk management
at Exel.
Planning for these
events is a very important part of overall
supply chain strategy,
with the aim being to
restore full service to
customers as quickly
as possible, he says.
One important
and often overlooked
element of crisis management is understanding the different
ways in which day-to-day operations will be impacted by
adverse events, says Renaud. For example, he notes that a flu
pandemic may create disruptions in the supply chain because of
employees being unable to come to work or to perform all of
their duties. “That could then create security exposures because
fewer people are watching the goods,” he says. Through its parent company Deutsche Post, Exel has been tracking the H1N1
virus. During the winter months in the Southern Hemisphere,
Australia and countries in South America experienced a 30-per-
cent to 40-percent increase in absences, “so we know it is coming,” Renaud says.
In another example, Renaud notes that weather disasters
can impact the supply chain in areas far removed from a
storm’s epicenter. The impact of Hurricane Katrina was primarily in the Gulf area, but areas as far north as the Ohio Valley
and beyond were disrupted by power outages, he says. “The
point is that all of these things are interrelated and when businesses think of crisis management, they need to think in a
holistic fashion,” says Renaud.
The number of disruptive events has increased significantly
over the past seven to eight years, and that upward trend is
likely to continue, Renaud says. “Companies need to make sure
they are evaluating their entire risk profile and that every aspect
of their business is prepared to react when crises occur, because
time has shown that they will occur,” Renaud says.
To view this video interview in its entirety,
visit www.SupplyChainBrain.com.
The performance gap between supply chain
leaders and those in ‘follower’ and ‘laggard’
categories is growing wider, according to Chuck
Poirier, president of the Advanced Supply Chain
Institute and a partner in CSC’s Global Business
Solutions and Services group.
Poirier’s conclusion is
based on seven years
of research conducted
in cooperation with
CSCMP, Michigan
State University and
Supply Chain Management Review.
During the early
years of surveying
supply chain professionals, “we started to
see that companies
were progressing along the supply chain maturity model,” says
Poirier. “They were getting more mature in their practices and
were saving money.” During the last two years, after MSU joined
the research effort, the survey expanded to look more specifically
at how companies were getting better in areas like sourcing, cost
reduction, and transportation and warehouse management. “To
my personal surprise this latest research was able to document distinct differences in performance. We now have statistical evidence
which shows that in almost every industry there are one or two
leaders with a number of followers and a lot of laggards that are
substantially behind,” says Poirier.
The superior performance of leaders is evident in both cost
and revenue figures. Evidence from this research shows leaders’
cost reduction efforts have boosted profits by up to 8 points for the
most advanced companies, though Poirier cautions that these
optimal results are the result of years of effort and investment.
“These improvements do not happen overnight,” he says.
Supply chain leaders are improving their top line as well.
“Leading companies are generating new revenue by doing a better
job of having the kind of products that customers want to buy on
the shelf and by differentiating their supply chain from their competitors,” says Poirier. Again, this result is measured in years, not
months, Poirier says. “I would say it takes these companies one to
five years to generate one to five percent in new revenue.”
To view this video interview in its entirety,
visit www.SupplyChainBrain.com.
