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?
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I agree that supply chain is that important to the success of a business. Improving technology will definitely help to prepare for future issues such as Hurricane Sandy. Just the experience of going through the storm and having to deal with all the damage should make supply chains be extra careful for the next storm. We are obviously in a time where we can predict storms like these, so there should be no reason to not take extra precaution when dealing with these kinds of problems.
Technology is probably just the start of the continuity plan for a given supply chain. Simulation and visualization tools are certainly important, but what is the back up plan if those things fail? The more effective the technology, the more reliant a company becomes on it. Had Hurricane Sandy wiped out servers or similar equipemt, the system might have been down even longer than if the old technology was being used.
Technology is but one resource to utilize in times of crisis. Companies must put a combination of resources in motion in order to repair or prevent supply chain breakdown brought about by uncontrollable circumstances as was recently demonstrated by Home Depot’s response to hurricane Sandy. Home Depot organized a logistics team in Atlanta in order to coordinate its local stores inventory management prior to and after Sandy hit the east coast. Given the increased need for portable generators in the affected zone Home Depot made sure that its stores carried enough generators to meet demand. Technology certainly played a role in Home Depot’s strategy but it was not the only component.
I believe supply chain management plays a huge deal especially with the holidays around the corner. Even with purchasing items online, such as Nordstrom, they are a huge department store, and when it comes to ordering items, on the very bottom it is noted in a different color font that orders may be delayed due to hurricane Sandy. We cannot control mother nature when it comes to natural disasters, but I feel like some companies should keep their supplies in other warehouses in other states versus one, that way they can have back up if they were to loose one of their warehouses. So with technology being one of a main resource that many consumers use today, it would be useful when it comes to predicting future natural disasters, and it can work as a communication strategy.
Technology is very important to businesses these days. When you think your ahead with technology you’er almost always behind. The way technology advances everyday its incredible. Companies always need to make sure that they are not falling back behind and also trying new things. This will help them stay ahead and on track. Mother nature on the other hand is unpredictable. It is up to the companies to have a back up plan if something were to happen. A plan to help keep things moving if something were to happen to their systems or a act of mother nature.