There has been much written about Iceland’s Eyjafjallajökull volcano. It certainly has had a significant impact on the global supply chain. One would need a very good crystal ball to predict this unplanned event, but it certainly exposes the vulnerability of distributed networks. Here's the big question: Will companies think differently after suffering the consequences of this natural disaster? What will they do different? I don’t think the answer is building more just in case inventory. In order to stay competitive supply chains have to be lean. (In fact, they are becoming even leaner with late stage postponement to satisfy increasing levels of customization on consumer goods.) Here are some questions for consideration:
- Can you proactively analyze and understand the risk of unplanned events? This may be the upside or downside in demand or supply disruptions. This also includes the identification of sole sourced material.
- Do you have the visibility and access to information in your supply network that you need? More and more companies are looking for a global view of all of their inventory with the need to rebalance as the demand and supply fluctuate
- Do you know what to do when you have a problem that you just can’t solve? When a volcano happens there is not much you can do about it. The question is are you making the best use of the supply that you have? How do you want to prioritize demand and allocate your supply? How quickly are you able to make these decisions?
While there may never be another volcano that disrupts the supply chain, there are daily disruptions that affect companies every day, and that taken in sum can have a material impact to the business. How do you deal with them? Send in your stories!
The keys to success include:
- the rapid accumulation of data around the scope of the problem and the impact to customers,
- the identification of a team to consider options, make decisions and to communicate the likely impact to stakeholders and
- the definition of appropriate communication channels with customers and suppliers.
I had raised similar questions in a post earlier today on our own blog http://www.valueunchained.com
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