Hurricane Sandy in the East Coast resulted in roads to be closed and shortages of gasoline and groceries in some areas of New York and New Jersey. The damages cost approximately $50 billion. Moreover, the storm also impacted the supply chain of products, which can determine success or failure of retailers during the upcoming holiday shopping season.
A high transparency of supply chain management system from procurement to warehouse to transportation is very important, for the reason that it allows businesses to quickly respond to the unexpected or disaster. According to The New York Times, before the Hurricane Sandy, economists expected 1-2 percent growth of the fourth quarter. After Sandy, they expect that the growth will be reduced by half a percentage point, and this may cause “ripples throughout the holiday season” (Knotts).
However, the storm is no longer an outlier of the supply chain disruption it caused based on a study by the Business Continuity Institute. This is because 85 percent of respondents worldwide experienced at least one disruption mainly associated with weather. The disruption becomes worse and worse “with the increase in megastroms worldwide and the growing complexity of international supply chains and E-procurement” (Knotts).
It is interesting that one third of the respondents do not know where disruptions occur due to the fact that the full supply chain is not being analyzed. A half of respondents said productivity is decreased due to the disruption, and a third said that they lost revenue. Fortunately, automating command and controlling of supply chains can mitigate losses.
The following lists are what companies need to take into account to create an effective supply chain management.
- Inventory: Businesses need to focus on stock quantity, location, shelf life and expiration, which will help businesses avoid costly mistakes.
- Asset: Businesses can use software to “accurately account for all assets across each facility from procurement to retirement with real time data available anywhere you have access to a browser or mobile device” (Knotts).
- Transportation: Transportation process should be automated including route planning and status notifications.
- Work orders: Businesses can use software to track all details of goods and services. Good work orders help businesses enforce accountability, timely response and work quality.
- Warehouse management: It should be automated for full transparency. By using software, it helps businesses “map the warehouse for maximum storage effectiveness and schedule enough workers to receive shipments, among many other capabilities” (Knotts).
This article relates to supply chain management topic from our class lecture. As we know, supply chain management is very important in today’s competitive market place since competition is among supply chains not companies. Therefore, it is crucial that companies have a good understanding and manage their supply chains effectively to avoid risks and costly mistakes that may happen.
What other factors other than those listed above do you think that companies should consider when it comes to effective supply chain management?