ProQua herewith presents you 3 articles from The APICS- e news
Vol. 7 | No. 5 | March 20, 2007
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Fire Drill
Companies need to dust off their supply chain continuity plans to ensure readiness
It’s a good time for managers to dust off their companies’ supply chain continuity plans. The spring weather season, gas price surges, avian flu worries, and ongoing uncertainty regarding port security increase the likelihood of global supply chain disruptions.
With all the daunting possibilities gathering like a darkening cloud, what’s a harried supply chain planner to do? How can service levels be maintained in the face of a darkening storm? We have all heard that the best laid plans go awry, but does that obviate the need for planning? Of course not. The following reminders may help your organization reinvigorate its planning efforts.
Clarify your company’s existing plans and start over if necessary.
If a supply chain contingency plan doesn’t yet exist, now is the time to move ahead with the plan. Expected cost analysis is the primary tool of contingency planning. It’s a four-step process in which an organization identifies potential events, determines the probability of each event and its business impact, develops plans to lessen the impact of events, and trains employees and managers how to respond post-event.
Collaborate with your trading partners.
A robust plan considers supply chain partners that are both upstream and downstream from the organization (i.e., spanning from your suppliers’ suppliers to your customers’ customers). This is often quite challenging, so the best way your organization can contribute to your supply chain’s stability is to make certain your organization’s contingency plans are up to date.
Study recent requirements.
This includes new guidelines and rules for your industry. Such rules and guidelines may affect customs, taxes, or insurance options. One highly dynamic area involves shipping containers coming through international ports of call. The Customs Trade Partnership Against Terrorism and the Container Security Initiative have changed the processes and procedures for handling cargo through ports. It is incumbent upon an organization to maintain current knowledge about requirements and restrictions to ensure a supply chain-related event doesn’t unnecessarily imperil your organization’s ability to source or deliver goods that travel by container through these ports.
Maintain the freshness of your plans.
More than likely, your organization has performed some supply chain continuity planning. Continuity plans can quickly grow stale, however, especially at a dynamic organization. There are a variety of planning tools available today that enable an organization’s normal changes to be incorporated into electronically tracked continuity plans.
“Fire drill” your plans. Is your company certain that backup records are adequately maintained? When is the last time an emergency “test restore” was performed to ensure hot sites are functioning properly? Technology can help make a plan widely available at a moment’s notice, but what happens if the event causes technology to falter?
Ensure employee notification mechanisms are in place.
Multichannel notification has become a hot industry. These days emergency messages are coordinated among e-mail accounts, phones, Blackberries, and so forth, and there is a burgeoning industry devoted to notification and response. Multichannel notification enables messages to be delivered quickly to a wide range of constituents and it also enables those constituents to respond. It would enable a large overnight carrier, for example, to quickly switch its routing hub on the fly while ensuring that no new packages are routed to drivers who have been unable to confirm they received the routing changes.
We hope there will never be another tsunami like the one that hit southeast Asia in 2004 or a repeat of the September 11, 2001, attacks, but hoping is an effete strategy. Organizations that were ready for Katrina of course didn’t anticipate the hurricane, but they readied themselves for resiliency. For example, Valero kept its plans fresh. When Katrina struck in August 2005, Valero leveraged its recently updated plans and notification mechanisms to quickly reopen 14 convenience stores in the affected area. That was a great triumph. Some of Valero’s competitors are still unable to reopen their stores.
—Jon Bellman, CPIM, CEO, Reality Check LLC, can be reached at (212) 586-4600 or via e-mail at jbellman@rcheck.com.
© Copyright 2007. APICS The Association for Operations Management
