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Expert Insight

By Nathan Pieri
Senior VP Of Marketing & Product Management

Management Dynamics

Date: April 14, 2011

Supply Chain Comment: Five Ways to Prepare for Global Supply Chain Disruptions

 

Taking Proactive Measures Can Ensure Rapid And Effective Crisis Management

Japan’s recent environmental disasters – a large-scale earthquake and ensuing tsunami, followed by concerns over nuclear plant meltdowns – are causing parts shortages and increased prices across a range of products, from cars to components for computers, cameras and tablet PCs.

The extent of the situation is unknown, as there is little information on manufacturing plant disruptions and no timetable for when electric power and infrastructure problems will be fully resolved. Experts predict that these issues will become more acute in the ensuing months.

Even if you have an overall planning process in place with established long-term goals, short-term contingency plans tend to receive less considered thought. Rarely do they result in quick and decisive action when it is most needed. Below are some measures you can take proactively to limit risk exposure and enable rapid and effective crisis management.


Measures To Limit Risk Exposure

1. Develop a Plan

Form a contingency team composed of key supply chain partners, (e.g., from the OEM, manufacture, logistics sides); and identify contingency scenarios:

 
    • Re-examine sourcing partnerships and identify alternatives
    • Model the impact of disruptions on your sourcing and inventory strategies
    • Identify a core contingency inventory strategy – in what form and quantity across the entire procurement, manufacturing, and distribution network – to be fine-tuned as the need arises
    • Develop a list of appropriate immediate and follow-up actions to achieve an optimal outcome for each contingency scenario, and, most important, appoint a point person to take charge of each contingency
 

2. Create Visibility

It is essential that all networks linking trading partners support end-to-end visibility and that all network partners participate in contingency strategies.  In this way you can monitor supplier performance in real-time and address any variances in your risk management system.


3. Build Flexibility

An agile supply chain can help mitigate risks.  Look at opportunities to alleviate current supply chain bottlenecks, model alternative transportation network configurations and look for alternative sources of supply.

4. Respond Decisively

Proactively link contingency plans and business objectives; and assure that point people have previously obtained corporate authority and by-in for the rapid execution of your strategy.

5. Continuously Improve the Plan

Continuously update the plan against long-term business objectives as well as changing market conditions, supply constraints, changing demand patterns, and other country-risk scenarios.


Final Thoughts


For more thoughts and discussions on this topic and others related to Global Trade Management, please visit http://gtmbestpractices.org

Nathan Pieri, SVP Marketing & Product Management, Management Dynamics, Inc. can be reached at Solutions@ManagementDynamics.com.


Agree or disagree with Pieri's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.


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profile About the Author

Nathan Pieri is the Senior Vice President of Marketing & Product Management and has over 20 years of marketing, product development and management experience at enterprise software and technology companies. Nathan has been with Management Dynamics since 2002 and is responsible for managing the product portfolio and leading the worldwide marketing of the company’s GTM solutions. Prior to Management Dynamics, Nathan has held senior-level marketing and product management positions at Celarix and Baan.


For More Information:
Solutions@ManagementDynamics.com
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Pieri Says:


Even if you have an overall planning process in place with established long-term goals, short-term contingency plans tend to receive less considered thought.


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