What is The Right Disruption Management For Your Supply Chain?
Business continuity plans are often not complemented by implementation plans at the operational or tactical levels that enable organizations to respond quickly and efficiently to crisis situations.
by Elena Revilla & María Jesús Sáenz
Supply chain management is still far from reaching the benefits promised by the achievement of a seamless, end-to-end pipeline. One of the main reasons for this failure is that companies are subjected to unprecedented levels of supply chain disruptions. The increased risk of disruption comes from a number of sources such as the growth in outsourcing, globalization, reduction of the supplier base, reduced buffers, increased demand for on-time deliveries, and shorter product life cycles.
The tsunami catastrophe that struck Japan in March 2011 demonstrated the disturbing consequences of supply chain disruptions. The ripple effect of the stoppages to supply and production in Japan was felt in many areas of the world, because numerous key parts are exported to global operation from this region.
Take, for example, the impact on consumer electronics company Apple, which relies on suppliers in Japan for 25% of the components used in its new iPad 2 product. Moreover, many of these contractors are sole-source suppliers. The iPad 2 went on sale just hours after the tsunami hit, and the subsequent shutdowns caused stock shortages and long delays to deliveries. The fallout not only frustrated Apple’s customers, but also its shareholders since the company’s share price declined by 8% due to the disruptions that followed the disaster.
Revilla, E. and Sáenz, M.J. What Is The Right Disruption Management For Your Supply Chain? Forbes, October 2011
