Category Archives: Supply Chain

Are You Ready for the Mega-Risks?

A recent Supply Chain Digest piece recently covered a few of the supply chain mega-risks that you need to be prepared for, because chances are that you can statistically count on at least one of them happening in the near future.

The mega-risks highlighted by Supply Chain Digest include:

  • Terrorists Attack Your Port
    The article focussed on an attack at at US port, such as the Ports of Los Angeles or Long Beach, which could cripple supply chains for a number of multi-nationals, but an attack at a major port in China, for example, could be just as devastating.
  • A New War Breaks Out
    The article hypothesized that Israel could attack Iran over nuclear capabilities, but war could break out anywhere tensions are high. Northern Ireland, Africa, Venezuala … who knows.
  • Pandemic
    The article mentioned the Swine Flu. But it could be Bird Flu. Or SARS. Or something worse.
  • Rapid Inflation / Deflation
    The dollar could rise, or fall, rapidly.

But those are just a few of the mega-risks. As highlighted in nine cautionary tales (which I reviewed in your supply chain is not secure I and II), you also have:

  • Massive Power Failure
    A targeted attack or opportune failure in a critical region of the grid can take out a city, state, or even an entire region of the country.
  • Toxic Atmosphere
    A train wreck could unleash toxic chemicals into the air and make an entire subdivision, town, or city uninhabitable for an indefinite amount of time.
  • Severe Oil Shortage
    A single attack on a major refinery or drilling platform could take out a sizeable chunk of global production.
  • Agro-Armageddon
    Mad-cow could spread faster than a viral outbreak and decimate national farm populations.

And natural disasters and catastrophes, though unlikely, that are still too numerous to mention. Are you ready?

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Doug Smock on the Dreamliner Supply Chain

 

This guest post is from Doug Smock of Design News and BCC Research.

The Dreamliner aircraft development project was launched by Boeing six years ago as one of the most ambitious technology and supply chain projects in history. On the technology side, the Dreamliner was the first commercial airliner design with a plastic composite body. On the supply chain side, Boeing made the switch from a top-down, disciplined captive design and manufacturing approach to one that was largely outsourced to suppliers around the world.

The Dreeamliner is now two years late, and it’s not an exaggeration to say that Boeing’s future rests on its outcome. Three years ago, Boeing officials were eager to talk about the great work on the Dreamliner, on the technology and supply sides. Now they’re mum, but I took a couple of shots at raising the questions about the Dreamliner, and then making some educated guesses about the answers.

So what are the questions?

And what are the answers?

Read my pieces on “What’s causing huge delays for the Boeing 787 Dreamliner” and “why the Dreamliner is so late” to find out!

Thanks, Doug.

What Is The Baseline For Smarter Supply Chains

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A recent article in RFID Journal states that, according to Karen Butner of IBM, “the baseline for smarter supply chains really is about RFID, sensors, and actuators“. Really?

What smarter supply chains require is visibility … near real-time visibility to be precise. You don’t need RFID chips and sensors to get that. You need processes and procedures that make sure that the status of every package is recorded every time it changes location … from the supplier warehouse to the transport truck to the dock warehouse to the container to the cargo ship to the dock to the transport truck to your warehouse … and that this information is always accessible. The status can be manually updated by a receiving clerk that scans a barcode with a handheld device or, if you are challenged when it comes to new-fangled gadgets, enters a bar-code into a dumb-terminal … which can then indicate if the bar-code is recognized and the state change is expected.

That would seem to tell me that the basis of smarter supply chains with near real-time visibility is not overhyped RFID & sensor technology, but smart people following smart processes that use smart information technology. Am I wrong?

Supply Chain Process: Art or Science?

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While browsing through a recent edition of the Harvard Business Review, I stumbled upon an article asking “When Should a Process Be Art, Not Science”? Naturally, this caused me to contemplate supply chain processes and ask if they should be art or science because it’s a good question.

The article notes that there are some processes that naturally resist definition and standardization — that are more art then science and that the idea that some processes should be allowed to vary flies in the face of the century-old movement toward standardization because process standardization is taught to MBAs, embedded in Six Sigma programs, and practiced by managers and consultants worldwide.

But maybe process standardization has been pushed too far, with little regard for where it does and does not make sense. Because sometimes it is output variation that creates customer value. For example, it is the job of the master winemaker to make the most of the distinctive qualities of each year’s harvest and not try to re-create last year’s vintage to a tee, when it may not even be possible.

Now, each supply chain process should be relatively standardized at a high level, as this allows it to be measured and repeated if it is successful, and we want our supply chains to be as lean and six-sigma compliant as possible, which leads us towards science, but is that the whole picture? For example, while a 15-point checklist, such as WalMart’s sustainability checklist, might be a necessary starting point in supplier selection — as you want suppliers who are financially stable, capable of meeting your demands in a timely fashion, responsible, and focussed on sustainability — it should not be the end point as well. After all, part of your job is to identify suppliers that add value and that bring more to the table than just cookie cutter contract manufacturing because that’s how you get an advantage over your competition. How they do that will be an art, and how you measure that will be an art.

So, supply chain processes are really a bit of both — science at the high level (and in the analysis of the details when you are doing a spend analysis or strategic sourcing decision optimization), and art in the middle … where you use your best judgement to find the best product and partner. Where you collaboratively work with your supplier to come up with a better and cheaper design and delivery system for both parties. Where you create value when none existed before. Science in management and art in the execution.

How do you manage the art?

You start with the three-step process outlined in the article.

  • Identify what should and shouldn’t be art.
    What shouldn’t should be “by the book”.
  • Develop an infrastructure to support art.
    Make sure your supply chain artists have the freedom to practice their art and create customer value.
  • Periodically re-evaluate the division between art and science.
    When your team strikes on something great that is repeatable, standardize it. When a process stops achieving the results it once did, put it out there to be re-created.