How to recover from supply chain disruptions

Posted on by Teddy Nee

Risk mitigation is a crucial component of supply chain management. Preparing for potential disruptions is one of the most important yet challenging tasks faced by company managers, especially since there is an abundance of possible situations threatening operations at all times.

Unfortunately, damage control planning is something many companies tend to neglect. Last year, a study conducted by the supply chain management team at the University of Tennessee found that only about 50 percent of businesses have a recovery process in place to reference in the event a facility’s operations are interrupted.

Importance of response planning
Companies of all sizes are susceptible to dangerous disruptions, with global supply chains being the most vulnerable. Which is why it is surprising that the report also discovered nearly all, or 90 percent, of surveyed organizations do not take potential risks into consideration when outsourcing.

It’s understandable that managers are generally more focused on improving day-to-day operations, such as customer service, identifying cost-savings opportunities and driving revenue. However, disruptions along the supply chain have the power to severely impact financial growth and overall performance.

Between natural disasters, security breaches, safety and regulatory compliance and system failures, it is virtually impossible to anticipate what will be affected and when attacks may occur. But the best approach for supply chain teams to take is implementing strategic risk management practices that will help minimize monetary losses associated with disasters.

Read more at How to recover from supply chain disruptions

Subscribe us to get updates in your inbox, or send us an email for discussion.

Facebook

Twitter

New Solutions for Supply Chain Risk Management: A Case Study

Posted on by Teddy Nee

We are entering an era where it is becoming possible to detect supply chain risks much more quickly. A case in point is offered by AGCO. AGCO AGCO +1.96% is a global leader in the design, manufacture and distribution of a wide range of agricultural equipment. In a discussion with AGCO’s Jan Theissen, Director of Strategy and Methods, and Jake Stone, Manager of Supply Chain Risk and Contract Management, I learned about this public, Atlanta headquartered corporation’s journey to improve their sourcing and supply base risk management capabilities.

AGCO’s products are marketed under a number of well-known brands, including Challenger, Fendt, GSI, Massey Ferguson and Valtra. The manufacture and assembly of their products occurs at 34 locations worldwide and historically each of these brands was managed as a separate supply chain. Further, because the company had grown by acquisition, these different supply chains used more than 10 different enterprise resource planning (ERP) solutions for direct sourcing.

Beginning in 2012, Mr. Theissen, a newly appointed procurement leader, led a transformation of the sourcing organization. AGCO moved from a fragmented and decentralized procurement to a centralized commodity management structure in order to better leverage buying synergies and increase the overall maturity level of this organization. Implementation of standardized roles and responsibilities, and global policies and procedures, were supported by an extensive change management program. The company formed a School of Purchasing to further develop the capabilities of the organization.

The risks associated with sourcing became part of each category manager’s job; these managers became responsible for supplier risk management, not just savings. Mr. Stone was brought into establish new, systems, processes and capabilities to manage procurement risk. One thing Mr. Stone put in place was a clear communication and escalation process to deal with risks once detected.

Read more at New Solutions for Supply Chain Risk Management: A Case Study

Facebook

Twitter

The Next Revolution in Supply Chain Management

Posted on by Teddy Nee

In the first revolution, the concept of supply chain, as opposed to logistics, was put forth. Constraint based optimization tools for the extended supply chain were developed to support the new philosophy. As this was going on, Lean and Six Sigma approaches to improving capabilities, not just at the factory level, but in other internal departments, as well as across the supplier and 3PL base, were gaining in strength.

It took a while, but it was recognized technology was not enough. The key process in SCM is the sales and operations planning (S&OP) process that balances supply with demand intelligently. S&OP itself is going through a second rev and we now talk about integrated business planning (IBP), a form of S&OP that is more closely aligned with finance. A related “revolution” that improves the demand half of S&OP is based on the concept of demand driven supply chains; this is the idea that it is important to not just create a forecast based on historical shipments, but having real visibility to demand at the point of sale to improve demand management.

In recent years, the topic of supply chain risk management has emerged and new processes and ideas have begun to be codified and turned into a distinct discipline. An emerging topic is supply chain sustainability; and indeed in many corporate social responsibility reports the topics of both supply chain risk management and sustainability are addressed.

Read more at The Next Revolution in Supply Chain Management

Share your opinions with us in the comment box below, and subscribe to get more updates delivered in your inbox.