Unpredictable natural disasters such as the 2011 tsunami in Japan or last year’s Hurricane Sandy are changing the way today’s manufacturers operate.
Uncertainties in the global economy coupled with recent environmental events have created new challenges for manufacturing companies relying on global suppliers to keep production schedules on track. As manufacturers depend on timely delivery of materials, these new obstacles have caused decision-makers to question the way supply chains are managed.
With daily insight into different areas of the business, employees are the first line of defense against supply-chain breakdowns. It is important to encourage daily risk assessment so employees are accustomed to identifying potential disruptions and fully understand resulting effects.
Even the largest companies in the world are susceptible to supply-chain disruption and the potential for negative consequences during a natural disaster or crisis.
To bolster the resilience of supply chains and ensure the company is prepared for disaster scenarios, organizations can utilize strategies such as:
Improving supply-chain dexterity
Manufacturers can decrease vulnerability to supply-chain interruptions by enhancing supply-chain agility. Enabling more time to respond to a change allows companies to anticipate unexpected network interruptions and make efficient modifications to processes in case of an emergency. Similar to how the fashion industry adjusts to meet quickly evolving customer demands, manufacturers can adjust to compensate for necessary rerouting in the supply chain.
Institutionalized planning process
As noted earlier, employees should have a comprehensive understanding of potential threats to the supply chain. Developing an established business process such as sales and operations planning will provide a basis for informing employees about alternative courses of action to keep production moving during a crisis.
Analyze hypothetical scenarios
It is not sufficient to plan for different scenarios. Businesses also must test hypothetical real-life situations using advanced supply-chain tools. Understanding how the network would be affected if suppliers shut down, what the extent of the impact on profits could reach and pinpointing alternate suppliers from other locations are essential to preparation. Knowing these answers in advance enables readiness and ensures decision-makers can quickly react in case of a true supply-chain crisis.
Using technology to prepare
Technology is a beneficial tool to accurately identify alternate routes for moving products through the supply chain. Companies also can use technology to analyze potential disruptions and quickly compensate for variations such as unexpected changes to sourcing and inventory; to help maintain cost levels; and to ensure customer service consistency during an emergency.
Choosing cloud deployment
While technology is essential to keep production in motion during a crisis, power outages could potentially shut down onsite systems, making programs and data inaccessible for employees. Cloud deployment is a safe alternative because it ensures data is readily available from any location, allowing decision-makers to continue important supply-chain assessments in varying situations such as evacuations or inability to travel.
By promoting risk management as a daily presence in processes, each division of an organization can assess commonplace sources of risk to educate employees on the necessary steps to reduce impact in case of an emergency. Companies of all sizes will be better prepared for supply-chain disruptions by increasing awareness, testing scenarios and determining a course of action before disaster strikes.
Mark Humphlett is director of industry marketing responsible for Infor’s manufacturing industry strategy.