By now, many Supply Chain Managers and their upper managements know the answer to that critical question raised above. As this is being written, the human cost of the 2011 earthquake and tsunami disaster in Japan is still being tallied, while staggering estimates of the worldwide commercial costs are still growing. For most with Asian supply chains, the common answer was deceptively easy: “… no worries for us, because our products and their components come from China … our logistics partners will merely ship around the affected areas ....” But for many, an awful, hidden truth emerged, reluctantly but inevitably brought out of the shadows by someone in the Transportation, Logistics, or Sourcing Department: their Chinese supplier(s) depended upon chips or other high tech components manufactured in - Japan! - a country now saddled with additional disruptions at supposedly unaffected production sites from rolling power blackouts, imposed to make up for missing electrical generating capacity! Who could have foreseen this string of problems?
Hopefully, this scenario didn’t happen to your enterprise because someone did look ahead. While most companies affected by these cascading disasters had to do at least some scrambling, those with an effective risk mitigation plan either avoided disaster or greatly reduced its impact. They had asked the critical questions months or years before, gotten answers, developed action plans, and were able to immediately implement those plans. The underlying truth: those critical questions were (and remain) quite simple:
- What happens to us when Element X of our Supply Chain is disrupted?
- Where do we obtain replacement product, or backup transportation, or new packaging, distribution, or other services?
- How do we arrange for these resources to be on guaranteed standby for our company?
- Are the costs of having guaranteed standby worth the results?
- Can we source from alternate location(s)?
- How long will the transition to our alternate source(s) take to be effective?
- How long will our alternate source(s) be available – and dependable?
- Which team members will dump their regular responsibilities on other desks so they can devote 200% of their normal work time to mitigating and managing our disaster response, using a playbook that could need some rewriting as scenarios play out?
- Who will write, continually update, and own that playbook in advance of disaster?
- Have all of our suppliers and their sub-suppliers who support this critical Element X asked, answered, and responded to their own version of these questions?
- Do we need to help (or force, or pay extra for) one or more of these suppliers to have their questions asked and answers in place to serve us ahead of all of their other customers?
Variations of this checklist and their appropriate responses exist for all Supply Chains, whether domestic, international, or global in nature. But they must first be asked and their answers must see daylight in the right format, plus have ongoing top management support, or they will be as useless as an unbuckled seatbelt, an empty fire extinguisher, and the smoke detector that was never installed.
So even if you weren’t affected by the most recent disasters in Japan, the challenges facing you are the same, no matter where or how your Supply Chain may break. When those breaks hit your company, and in time some version of them will indeed hit your company, will you be driving the bus on a planned route you have developed, or will you be thrown under the bus for not having solid disaster recovery plans?
This article is part of the monthly series authored by ISM’s Logistics & Transportation Group Board Members, who are current practitioners, consultants, and educators. In future columns, they will continue sharing their views on a number of Supply Chain topics.
George Yarusavage, CTL, C.P.M., is a principal in Fortress Consulting, specializing in Transportation and Sourcing issues. He is also the Treasurer of ISM’s Logistics & Transportation Group and can be reached at gyarusavage@yahoo.com or (203) 984-4957. Membership in the Group is open to all ISM members who are responsible for or have an interest in the Logistics & Transportation fields.
Hopefully, this scenario didn’t happen to your enterprise because someone did look ahead. While most companies affected by these cascading disasters had to do at least some scrambling, those with an effective risk mitigation plan either avoided disaster or greatly reduced its impact. They had asked the critical questions months or years before, gotten answers, developed action plans, and were able to immediately implement those plans. The underlying truth: those critical questions were (and remain) quite simple:
- What happens to us when Element X of our Supply Chain is disrupted?
- Where do we obtain replacement product, or backup transportation, or new packaging, distribution, or other services?
- How do we arrange for these resources to be on guaranteed standby for our company?
- Are the costs of having guaranteed standby worth the results?
- Can we source from alternate location(s)?
- How long will the transition to our alternate source(s) take to be effective?
- How long will our alternate source(s) be available – and dependable?
- Which team members will dump their regular responsibilities on other desks so they can devote 200% of their normal work time to mitigating and managing our disaster response, using a playbook that could need some rewriting as scenarios play out?
- Who will write, continually update, and own that playbook in advance of disaster?
- Have all of our suppliers and their sub-suppliers who support this critical Element X asked, answered, and responded to their own version of these questions?
- Do we need to help (or force, or pay extra for) one or more of these suppliers to have their questions asked and answers in place to serve us ahead of all of their other customers?
Variations of this checklist and their appropriate responses exist for all Supply Chains, whether domestic, international, or global in nature. But they must first be asked and their answers must see daylight in the right format, plus have ongoing top management support, or they will be as useless as an unbuckled seatbelt, an empty fire extinguisher, and the smoke detector that was never installed.
So even if you weren’t affected by the most recent disasters in Japan, the challenges facing you are the same, no matter where or how your Supply Chain may break. When those breaks hit your company, and in time some version of them will indeed hit your company, will you be driving the bus on a planned route you have developed, or will you be thrown under the bus for not having solid disaster recovery plans?
This article is part of the monthly series authored by ISM’s Logistics & Transportation Group Board Members, who are current practitioners, consultants, and educators. In future columns, they will continue sharing their views on a number of Supply Chain topics.
George Yarusavage, CTL, C.P.M., is a principal in Fortress Consulting, specializing in Transportation and Sourcing issues. He is also the Treasurer of ISM’s Logistics & Transportation Group and can be reached at gyarusavage@yahoo.com or (203) 984-4957. Membership in the Group is open to all ISM members who are responsible for or have an interest in the Logistics & Transportation fields.
