bigpicture
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Hear no risk, see no risk …
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IT IS MIDWINTER HERE IN THE NORTHEAST, A TIME OF YEAR WHEN
travel plans always risk disruption as icy winds and storms sweep down
from Canada. Logistics managers know all too well how weather can interfere with cargo movements via highways, mountain passes, and sea and air
lanes. And it’s not just logistics managers in the Snow Belt who need to
keep a wary eye on the forecast. A typhoon somewhere in the Pacific can
easily disrupt inventory flow on land thousands of miles away. Indeed, it is
almost inevitable.
Chalk it up to a gloomy winter’s day, but I’ve been thinking about the myriad ways that nature—not to mention accidents, criminal and terrorist attacks,
Business Continuity Institute found that 72 percent of
respondents had suffered at least one supply chain disruption in 2010. Bad weather was the main culprit, cited
by 53 percent. That was followed by unplanned information technology and telecommunications outages and
failures on the part of providers of outsourced goods and
services. Companies that have shifted production to low-cost countries were particularly vulnerable: 83 percent of
those firms experienced disruptions, mainly due to transportation problems or suppliers’ insolvency.
For most of those companies, supply chain disruptions were not a one-time event. The average number of disruptions per
company was five, and some organizations reported 52 or more—more
than one a week. One-fifth of respondents admitted that supply chain disruptions had damaged their brand or reputation.
With that in mind, here are statistics I found particularly startling in this age
of lean inventories and widespread outsourcing: A mere 7 percent of respondents have ensured that their suppliers have adopted business continuity
plans, while a full 24 percent have not even made an effort in that regard. In
other words, 72 percent of the survey respondents have experienced disruptions, many admit to having suffered lost productivity or some other type of
business damage as a result … and this issue is still not top of mind.
Every supply chain manager should know that disruption of some sort
at some time is inevitable and that disruption can seriously hurt their business. To my mind, this much should be obvious to all: No supply chain
management strategy can be considered complete unless it includes a business continuity plan for every critical segment of the company’s network.
