There is no questioning the importance of supply chain management to a successful business. A supply chain disruption causes production to come to a screeching halt and has negative effects on business performance and shareholder value. When we discussed this topic in class, I could not help but think about the magnitude of issues that results from a disruption to the system. Especially with the pressure to improve efficiency and reduce operating costs, supply chain systems are becoming increasingly more complex and involved that one major disruption could end up costing a company a significant amount of money. Not long after discussing OM in the News examples in class of disruptions to supply chain management did we experience a devastating hurricane that not only affected the lives of those on the East Coast but also affected businesses everywhere.
Hurricane Sandy was unforgiving as she tore through the East Coast. Articles such as Holiday Shopping Is Being Threatened By Crippled Supply Chains are surfacing everywhere speaking about the devastating consequences that came from damages to supply chains. Retailers suffered a huge blow because of all the damages to ports and rail lines, along with destroyed warehouses full of merchandise. The effects of Hurricane Sandy may carry over into the holiday season and affect forecasted sales for countless businesses.
Although these situations are less than desirable, they occur. I was curious about what businesses could do to soften the blow and be more prepared for these situations. I came across an article in the Wall Street Journal that tackled these very questions and had some insightful suggestions. Command and Control: Managing Supply Chain Risk interviewed Kelly Marchese, a principal with Deloitte Consulting LLP who specializes is supply chain management, regarding potential threats and risks the affect the supply chain and how business can be more prepared to sufficiently handle the situation.
Kelly’s response was that companies need to make updating their technology a priority. Too many companies are attempting to manage global supply chains with technology that dates back 5+ years. The most important tool is to use technologies that provide simulation, visualization, and analytical capabilities. These new technologies have different benefits such as allowing managers to simulate different improvement initiatives and their impacts before actually implementing them. Kelly also stresses the importance of updating information management architecture to better connect all of the facilities and sites in the supply chain, especially since critical supply chain data from specific locations or regions is often overlooked since it isn’t available. However, these technologies do come at a cost and these costs may be difficult to justify, especially in our struggling economy.
Do you think that improving technology is enough to solve a problem that has severe consequences to businesses? Is there anything else that supply chain managers should focus on to be better prepared for these moments of crisis?