Daily Archives: January 27, 2014

A Major Disruption to Supply Chains Occurs Every Day – Is Yours Ready?

In 2013, Resilinc, a provider of supply chain resiliency soutions, reported 355 major Event Notifications that significantly impacted all supply chains that were in the vicinity of, or connected to, the event, which included natural disasters (hurricanes, floods, earthquakes, volcanic eruptions, tornado, extreme weather, and other force majuere events), man-made disasters (factory fires/explosions, power outages/shortages, factory shut-downs, chemical spills, etc.), extreme economic events (labour strikes, bankruptcies, port disruptions, levying of major fines, etc.), geopolitical events (acquisitions, rioting, FDA actions, etc.), and recalls, to name a few. Some of these events, such as bankruptcies, were localized to a few dozen companies that depended on the supplier that went bankrupt, but others, such as the Solomon Islands earthquake and tsunami off the coast of Japan or the Haiyan Typhoon in the Philippines (that wiped out a number of coastal cities) affected thousands of sites and the tens of thousands of supply chains that depended on the suppliers that had factories, warehouses, and/or other operations at those sites.

The impact of these events on their respective supply chains ranged from tens of thousands of dollars to hundreds of millions. If a factory that produces a critical single-sourced component for your most profitable product line is destroyed, the costs associated with finding a new source — which include, but are not limited to, manpower costs, premium production costs, premium raw material costs, downtime costs, lost customer costs, etc. — add up quickly and can easily run into the tens of millions for large high tech, equipment manufacturing, aerospace, and automotive companies.

But if your company is prepared, most of these costs can be mitigated. How do you prepare? You make the right investments in supply chain resiliency. To find out how to get support from the C-Suite for these investments, tune into this Wednesday’s webcast on Justifying Investments in Supply Chain Resiliency in 2014, sponsored by Sourcing Innovation and Resilinc.

Top 12 Challenges Facing India in the Decades Ahead – 10 – China

China is currently everything India is not. While India is the land of contradictions, China is the land of conformity. While India is an infrastructure nightmare, China, which is already decades ahead of India in infrastructure, is investing heavily, building rapidly, and getting even further ahead. While India is in a perpetual state of energy crisis, the energy sector in China, where the government can effectively control the 11 companies that used to compose the State Power Corporation (SPC), is stable and increasing energy production year over year to meet the needs of its population which make it the world’s second largest electricity consumer after the United States. (In 2011, annual power generation was 4693 TWh, which was over five times the power generation in India that peaked at about 877 MWh.)

But it’s not just infrastructure and energy that China has the lead on. It’s just about everything else too. As per a recent NYT (New York Times) article on Why India Trails China, India has an even bigger problem. In particular, it’s the ever-increasing gap between India and China in the provision of essential public services. And while inequality is high in China (as the 1% control 70% of the country’s wealth, compared to the US where the 1% only control 35% of the country’s wealth), China has done far more than India to raise life expectancy, expand general education, and secure basic health care for its people. Plus, literacy in China significantly exceeds literacy in India at 95% vs 74% in India. While India has elite schools of varying degrees of excellence for the privileged, among all Indians 7 or older, nearly one in every five males and one in every three females are illiterate. And while China devotes 2.7% of its GDP to government spending on health care, India allots a mere 1.2%. (That’s probably why China has a much lower child mortality rate that is less than one third of India’s. See A View from the East.)

In terms of business, China is ahead of India in many respects. China exports goods almost twice as fast, registers property more than twice as fast, and business start-up times are almost 33% faster! (See: IndianEconomy.org) Despite being a democracy, India is less politically stable and more corrupt. (See: Interlink India) And the proof is in the GDP pudding. In 1995, when India represented only 3% of world GDP, China represented 6% of world GDP, and in 2010 when India was still only at 5% of world GDP, China was at 14%. (See: The India Site) And while India is expected to increase its GDP by a mere 4.4% next year, China is still on track to increase its GDP by 7%.

Infrastructure. Public Well Being. GDP. While just a few measures of global influence, they are a few important measures and China is leading on every single one. That’s why China is projected to have almost a quarter of the Global GDP in 2025 (by The Conference Board), more than triple what it had in 2000, while India is projected to have a mere 8%, only double what it had in 2000. If India wants to achieve its destiny of being the second most prosperous and influential country on the planet, it will have to at least keep up with China instead of losing ground every day.