Successful supply chain management requires a company to recover from disruptions, which are a normal part of any business. We have recently talked about unexpected and unusual disruptions / mistakes. But normal disruptions can and should be solved by the “operations people”.
Now that all the smart companies have gone into a unified Supply Chain Management organization including Procurement and Logistics, everything is much easier. The solution for on-going disruptions is the SCM Control Tower. They now also play an important role in unusual disruptions, but the “War Room” full of executives, consultants etc might still happen for big or strange stuff.
So let's see what kinds of “normal” disruptions we run into and how we deal with them:
Factors such as supply source, volume, manufacturing location and inventory will be the usual culprits.
In the current environment, building to order and obtaining supplies JIT means that mistakes in supply chain optimization are easier to make than ever before. Remember the 80-20 rule? 80 percent of the parts budget was spent on the top 20 suppliers. Outsourcing and globalization messed up this approach.
Supply chains that rely on a single source are now more likely to experience disruptions. Supplies without an alternate source can become a single point of failure for the supply chain. Managers often don't know where their parts are coming from, which means they are unable to determine their true supply chain. For example, a part that a manager believes is dual-sourced may actually be single-sourced one or more levels up the supply chain.
Messing up things is now the requirement to wait until all parts are present before shipping the product. The lack of visibility across dependencies in the supply chain is also a challenge for managers in the current global environment. Other issues are delivery delays, increases in demand, quality problems, supplier issues, supply shortages. WOW, here is where the SCM Control Tower will earn its keep.
Gone are the days when most CEOs hold the Chief Procurement Officer responsible for disruptions to the supply chain, although the specific parties that the CPO held responsible for this possibility is less clear. Organizations did not typically don’t assign the responsibility over supply chain disruptions to anyone at the operational level within the procurement organization. This lack of accountability resulted in confusion when the action needed to restore the supply chain falls outside the scope of normal activities.
Globalization of businesses has created a greater risk of disruption in supply chains.and requires a different strategy from that used in traditional supply chain management.
The unified Supply Chain Management function in conjunction with an SCM Control Tower has changed on-going disruption recovery to something day-to-day (sometimes referred to as “run of the mill”).