GLOBAL SUPPLY CHAIN MANAGEMENT
Preparing for Risks and
Disruptions
While the global economy
continues to remain sluggish,
there is still a rising demand
for new products, sources and
markets. Nearly all multina-
tional corporations (MNCs)
have learned more about
globalization and the risks and
rewards that come with it. But
MNCs and middle market com-
panies still struggle with sup-
ply chain disruptions, higher
costs of logistics, and issues
caused by longer lead times.
Supply chain managers have
to plan and execute better
globally. At the same time,
more effective strategies and
methods are evolving to over-
come these challenges and
achieve profitable growth.
—Gene Tyndall, EVP Global Solutions,
Tompkins International
t is clear that very few companies are satisfied with their global supply chain opera-
tions despite their growing business dependence on strategic global sourcing and
global product distribution. Concerns of increased risks, supply chain disruptions,
higher costs of energy and logistics, and capital efficiency are in the forefront.
These concerns heightened in 2011 and will continue on the agenda for 2012.
A recent survey by the Business Continuity Institute revealed some troubling facts.
Among these were: (1) more than 50 percent of companies cite weather as the top
supply chain disruption; ( 2) supply chain incidents lead to financial “hits” (e.g., loss
in productivity, higher costs, and lost revenues); and ( 3) these “hits” are doubled in
size when supply chains are not “resilient.”
Obviously the weather cannot be controlled, but the severity of its adverse effects
on companies can be minimized. Supply chain resiliency is derived from effective
planning and smart execution. From a global supply chain planning perspective,
organizations can plan for contingencies as well as for an alternative flow of goods.
They can prepare by challenging logistics networks more proactively and establish-
ing alternate plans for the routing of goods.
On the execution side, with effective planning around several scenarios, there are
some feasible options to employ. However, few “war plans” ever hold up in battle, so
it is unrealistic to expect that supply chain plans can respond to every surprise in the
global environment.
What actions can be taken to execute in the middle of a crisis?
1. Work closely with trading partners—suppliers, service providers, and cus-
tomers—to reach acceptable solutions for everyone involved.
2. Leave the “war room” (command and control center) and devise alternatives.
3. Rely on the new tools for analyzing supply chains and options for tracking and
tracing goods from end to end, and for rapid responses.
Not all global supply chain management issues are risk-based or disruption-based, but these get all the attention from the executive suite. It is up to global supply
chain managers to not only be prepared for the negative events but also to adopt
continuous improvement strategies for their supply chains. There is no room for
complacency in planning and managing worldwide supply chains.
I
The Outlook
In 2012, more global supply chain managers will have to raise their knowledge and
capabilities in all the mega processes: plan, buy, make, move, store and sell. All the
processes come into play when products are positioned for sale—whether through
retailers, e-commerce, distributors, or internet fulfillment. Supply chain managers are
finally getting the executive support needed, but with this support comes responsibilities. Leading practices, new solutions, and innovations are being learned every day.
