Lasting Effects of Supply Chain Mismanagement

In New York City, March 25, 1911, 123 women and 23 men died from fire, smoke inhalation, or falling or jumping to their deaths when a fire broke out in the building where their factory resided on the eighth, ninth, and tenth floors.

The incident was known as the Triangle Shirtwaist Factory fire and is the deadliest industrial disaster in the history of the New York City.

This tragedy and loss of life eventually led to legislation requiring improved factory safety standards.

While this famous incident is over 100-years-old, workplace deaths and injuries are still happening today.

In a recent case, Cusseta, Ala., Regina Elsea was working at an auto parts manufacturer on the assembly line when a mishap occurred, and Elsea was impaled by one of the robots. She died the following day.

The Occupational Safety and Health Administration reviewed Elsea’s case and found the contracting company she worked for was in violation of a federal law that could have prevented her death.

Sadly, in both cases these accidents could have been prevented with better evaluation of contractors and adherence to higher standards of safety in the workplace.

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Why Supply Chain Risk Management is Key to Supplier Management

While brand damage can be quite costly to the businesses whose sales rely strongly on the customer loyalty they generate from their brand strength, cost volatility and supply disruption is very costly to all manufacturers. In fact, in the latest 2015 study by the Business Continuity Institute, supply chain disruption is double in priority relative to other enterprise disruptions and over three-fourths of respondents cited that they had at least one recent (significant) disruption. The same percentage didn’t have full visibility of their supply chains.

While category management can address and even reduce supply chain risk by ensuring a chosen strategy has the right level of resiliency, prevention and agility, it cannot prevent risk or do much to eliminate the source of risk once something has happened. That can only be done by each party in the supply chain doing everything they can to eliminate the risk. In particular, a supplier needs to do all they can to minimize the risk on their end.

However, not all suppliers are as advanced in supply chain management, and in particular, risk management as the buying organization. That’s why good supplier management combined with SCRM is key. Good risk management is a combination of risk prevention and risk mitigation when a risk is detected. Risk prevention involves selecting suppliers, products and services that are low risk and risk mitigation involves taking action as soon as an indicator is detected.

A supplier is not always good at mitigating or even detecting risk in its supply chain, or may overlook an obvious sign that an observant buyer would not, which is why proper supplier management is key. This begins even when qualifying suppliers. Including risk criteria related to the supplier and supplier location gives a good indication of a supplier’s the risk level. Besides the supplier qualification criteria, supply location-related risks provide an overview on potential threats like natural disasters, political situation, sanctions or economic risk. This gives buyers the chance to take preventive actions.

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