RESILIENCE IS MORE THAN RISK MANAGEMENT

RISK MANAGEMENT

Resilience is more than risk management. It is a capability to get to the future by limiting the impact of disruptions. Risk management is necessary to manage particular supply chains as well as the supply chain system. Anticipating risks from disruption is an important skill. Assessing risk and assigning probabilities to manage risk are parts of any risk management system. Beyond the immediate supply chain risks there are risks that threaten the total supply system. It is necessary to take a systems view of risk if you want to build resilience across the total system. An example would be energy supply chains which are made up of entity supply chains (e.g.extractors, refiners, generating companies) linked to buying organizations (re-sellers, business and consumer suppliers) which are linked to business supply chains and consumers at some point in the chain. The total supply system would consider risk at each node from source to consumption. This means not simply managing risk in the organization supply chain it means managing the risk in the system which has many supply chains. Resilience requires steps to manage beyond the immediate supply chain, beyond intra and  interorganizational supply chains linked in the total system. Resilience capabilities have to be developed to manage systemic risk.

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We cannot solve a problem with the same thinking that created it.

Albert Einstein

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As John Maynard Keynes noted markets do not always work as expected when this happens it may be necessary for government to intervene to correct the problem. Governments have a responsibility to secure strategic assets that may include: energy, food, water, public utilities, banks, defense and other resources. These are the resources that are needed to maintain life and provide security for the population. Yergin and Stanislaw (1998) refer to these resources as the ‘Commanding Heights of the Economy‘ after Lenin and Marx.

RESILIENCE

• Resilience is not a quick fix
• Resilience is a long-term commitment
• Resilience requires investment
• Resilience requires trained and highly skilled personel
• Resilience requires immediate intelligent response
• Resilience is continuous not episodic or ad hoc

Resilience is the ability to bounce back from disruptions. In supply chains one thing is certain at some point there will be disruption. Something that knocks your plans off track. Those that plan often make plans resilient by adopting ‘what if?’ strategies. This means having plans to get back on track quickly when the unexpected happens.

Resilience is tested when goods being shipped in containers are held up or when there is a labor strike at a port or supplier production unit. It can be beyond supply disruption which is a symptom not a cause of something much bigger. For example, when a pandemic grips the world. This is systemic disruption. What makes for resilience in these circumstances is having the capacity to bounce back quickly. Capacity which has been built through planning and investment to ensure it is present when needed.

Securing strategic assets must be part of resilience. If we think about the needs of a nation state we could produce a list that would include: defense, energy, food, healthcare, materials and technology amongst other things. These are what Lennin  and Marx referred to as the ‘commanding heights’ of the economy. We expect governments to secure strategic assets. One of the problems for some nation states is ‘short-termism’. In democratic states governments are elected for 4 or 5 year terms and commitments follow suit. The long-view has been something that eastern countries such as China and Japan have been admired for. Without such long-term views it is difficult to develop continuity for resilience.

In my discussion of the West’s dependency on China I drew attention to the long term planning to acquire rare earth minerals and strategic metals for battery technology. China has built resilience and continues to do so. Western economies have been wedded to the market to solve their problems. I mean that they see the price mechanism as a way to fix disruptions rather than build capacity through investment to achieve it. In essence you assess and balance risk through markets. This will become clearer as I discuss risk.

People and Technology

Creating the right culture is part of building resilience. Expectations have to be set and carefully managed. Developing people and teams to respond effectively when disruption strikes is critical and it requires a mix of people and technology to achieve results. Having data in the right form to signpost what is happening in the supply chain often gives advance warning. It may not always provide signals as soon as you would like but ensuring that teams are trained to interepret data and respond effectively is the key to minimising the impact.

Let me demonstrate using an analogy from Formula 1 racing. A driver may be the first to recognise a problem in the car and quickly signal to the pit team what is happening. Each person in the pit team has a role and knows exactly what to do in the particular circumstances reported. Quick response is necessary to effect a repair or adjustment that will get the car back on track immediaitely after the incident without delay. Supply chains have to become resilient in similar fashion with every team member knowing their role and having a skill set so that each member knows exactly what to do in the specific circumstances.

In ‘Competing for the Future’ Gary Hamel talked about everyone being a prisoner of their experience but this need not be the case if you can learn skills that stretch beyond that experience. You can learn from the best and from the mistakes of others as well as from your own experience.

RISK

Risk is managed through probabilities. This is a first step to map risks that may disrupt supply chains. Time is an important element of this assessment. What is the likelihood of something happening and how long will it last? This is more than probability, it is impact too measured through time. An example such as the Ever Given Container Vessel demonstrates both. If we were assessing the risk prior to occurrence the probability statistic might have been close to zero (.0001), since in the Suez Canal’s history over 100 years of past data there had been no such event. The impact was more than the 7 days the ship was stuck. It took months for ships and container traffic to bounce back to something near normal throughput. So how do you plan resilient strategies for unlikely but possible events? If you do not want to over invest in capacity you have to be agile. Agility depends on thoughts and action. Firstly, you must anticipate such an event. Secondly, you have to think through scenarios and cost the options. Thirdly, make the decision. Necessary but not easy because resilience costs but it will cost less if you anticipate and plan agile strategies.

In supply chains there are many risks which I summarized in my 7V Framework based on more than twenty years researching supply chain risk across different industrial sectors. The factors that create value are also those factors that carry risk. Volatility, Volume, Velocity, Visibility, Variability, Virtuality and Variety are the seven risk factors.  The profile of risk is not the same for every organization but the factors are. The question for organizations to address is to identify how each of the factors contributes to that particular organization’s mix profile. Of course even inside organizations there will be different supply chains that are affected differently by the mix elements. A simple example might make this clear. Supposing we operate a supply chain that has regular demand patterns that lead to constant reorder patterns from a consistent supply base. This type of supply chain should not be affected by volume risk or variability. Whereas a supply chain where volumes are less predictable and sources of supply are more volatile will have a very different profile of risk.

Resilient strategies require investment in resources to build it. Examples include people, training, technology, systems, sourcing, procurement, operations, warehousing and distribution. Each element forms part of the mix. Resilience extends beyond a single supply chain which means investment in the network is necessary. Supply chains have to be thought of as service systems satisfying customers if we want to build resilience.

Analyzing systemic risk requires constant scanning for threats. In the process of doing so we may also find opportunities to enhance the system capabilities which increase resilience. A similar process can be implemented at organizational level or for a specific product supply chain with the aim of building resilience.

RESPONSIVE SYSTEMS

Supply chains are service systems. We should never lose sight of this fact. Service to customers however defined is central to the supply system. Building resilient supply chains means that customers can be served efficiently and effectively. Service means being responsive to customers at the time service is required. This responsiveness is common to public services and to private enterprise. Time is of the essence.

CONCLUSIONS

Resilience is important in any system. In supply chain systems it is paramount. Supply systems exist beyond immediate firm and intra-firm supply chains. Risk has to be anticipated, assessed and probable outcomes assigned to manage the risk for the system. Within the system organizations are responsible for managing their own intra and inter-organization supply networks. Agile strategies can be employed by firms inside their own supply networks. Responsiveness is an important capability to build. Resilience goes beyond agility and responsiveness by allocating resources to the total supply chain system proportionate to risks identified in that system.

ProfessorTony Hines PhD, writes and talks about supply chain strategies. He is author of Supply Chain Strategies published by Routledge. He presents the Chain Reaction Podcast all about supply chain advantage.

Listen also to the episode Reflections On Resilient Supply Chains which discussed the part geopolitics has played in moving supply chains towards resilient strategies.

Retail Logistics, Disruptions and Resilience

Since the pandemic began in 2020 disruption to supply chains has become expected. It is no longer a surprise to experience delayed deliveries and empty supermarket shelves. Transport is at the centre of getting the right goods to the customer in the right place, at the right time and at the right price. On time and complete delivery was the mission for those delivering supply chain promises.

The advances made by professionals managing supply chains was there for all to see back in 2019. Supermarkets mostly had goods available for customers when they wanted to buy. Othere retailers too, had in stock items more than out of stock. Online you could order and have deliveries within 24 hours for most items. Costs were generally kept low and transport too offered low price deliveries if you were prepared to wait a bit longer. Consumers were often getting items from online retailers fast and with free delivery.

Innovations in quick response to customer demand had been driven by online retail and mainly by one company Amazon. Amazon’s approach had shaken up sleepy delivery and slow logistics. Many people are critical of Amazon’s approach and we often hear claims about their labour practices in warehouses. Like many successful businesses criticism comes from and is often driven by the competition who have had to shape up. We should remember Amazon has achieved a goal of bringing consumers what they want when they want it and at affordable prices. The variety and volumes the company deals with is mind boggling. Without consumer demand Amazon would not exist. So next time you think about over consumption just ask yourself what you are doing to change things and consider what drives organizations like Amazon to innovate. It is most likely you – the customer.

Where there are customers there is a market. It may not be a physical place any more although some are. It is more likely to be in digital space. Consumers can order anything and have it delivered without moving from their easy chair.

So what went wrong?

The speed at which the pandemic took hold across the globe caused disruption to normal production and to transportation of goods. As people became sick with Covid many production operatives and those working in shipping and freight transport were also impacted. Reworking production plans and rescheduling operations became part of the normal activities for all. As a consequence of disruption to normal supply chains many goods including food, textiles, clothing, electronics and pharmaceuticals were disrupted. Procurement of items that were in normal times easy to get hold of suddenly became more difficult.

There was also the difficulty of getting hold of personal protective equipment and ventilators for hospitals. Demand was sky high as everyone everywhere was in the same boat.

Disruptions occur for many reasons including changes to demand, supply shortages, distribution problems and the impact of natural phenomena such as fires, floods, earthquakes and volcano activity. In the last few weeks have witnessed unprecedented flooding in New Orleans, New Jersey and New York. There have been raging fires elswehere in California. President Biden vowed to make supply chains resilient back in March 2021. This is now being tested. Investment in infrastructure is required to combat the effects of climate change. The Intergovernmental Panel on Climate Change (IPCC) has indicated that CO2 emissions are likely to increase by 1.5 degrees celsius in just 11.5 years and weather patterns are likely to be more unpredictable. Supply chains are responsible for about 80 per cent of the emissions in some shape or form with production, distribution and consumption. It is incumbent on all of us to ensure that we do everything we can to minimise the impact of climate change. This is likely to cost more in the short to medium term for individuals, businesses and governments. Tackling it now will ensure it does not cost the earth.

Retail Leaders in Logistics

Amazon have been a game changer in retail logistics. The company delivers all sorts of products on a daily basis. Lead times from order to delivery is fast. Orders can be delivered same day or next day in many cases. They have organized their warehouses to satisfy customer demand. You will see robots moving goods in many. Picking, packing, box selection and labelling is often automated where possible. Distribution hubs are located near transport links for road, rail, air and shipping. For a 1990’s start up in a single category – books they are doing well. They now cover nearly all retail categories and many business to business supplies. A company built with technology and innovation that has dominated consumer retail. Amazon is the largest online retailer in the world. It may now even be just the largest retailer taking the mantle from WalMart. These two companies are retail giants of the 21st Century. WalMart’s core competence was scale and distribution. For Amazon it is Technology, Innovation and Customer Focus. Amazon’s freight shipping arm moved more than 5,300 container boxes from China to the USA in 2018.

Disruptions

Disruptions come in many forms. Some are relatively simple to solve whilst others persist. There are many breaking points in an extended supply chain from source to end customer in the end to end supply chain. Predicting where the likely problems may occur is all part of managing the supply chain. If you can identify weak points in the chain you will most probably be able to develop a plan for dealing with the disruption, if or when it happens. Some disruptions will be specific to the orgainizations linked together in the supply chain while others will be systemic affecting all firms in the total supply chain. Examples of each type of disruption could be: A retail promotion causes a bullwhip effect which disrupts the total supply chain. This is a Type 1 disruption. It is specific to the organization supply chains linked together and is unlikely to impact the total supply chain system. The change in demand pattern by the retail organization has caused a problem specific to that supply chain – the bullwhip which changes the system dynamic in the chain. Type 2 disruptions such as a natural disaster will impact all supply chains in the location and beyond. This is systemic.

If we think about recent examples reported we can easily begin to make the distinction. The shortage of HGV drivers in the UK to move goods from point of origin to warehouses and on to retailers is an example of a systemic problem. Brexit bureaucracy is a systemic problem. The Northern Ireland protocol is a systemic problem. Container box shortages and shipping disruptions are a systemic problem. Empty shelves at supermarkets could be caused by either type 1 or type 2 disruption. For example, if a production unit has to temporarily shut down due to Covid 19 it might be claimed that the disruption is part of the underlying systemic problem due to Covid 19. Hence a Type 2 systemic problem. If the production unit closed due to a machine breakdown it is Type 1 and not systemic. If deliveries are disrupted by a change of scheduling it is a Type 1 problem. Whereas, if the disruption is because of a shortage of HGV drivers, it is a Type 2 problem.

The Container Box Problem

Container boxes in the wrong places and shortages of shipping space have been problematic during the pandemic. Many ports in different parts of the globe have been affected. This is a Type 2 problem in my classification. It is a systemic problem.

Photo by Martin Damboldt on Pexels.com

Delays at Ports Loading and Unloading

Covid 19 has caused temporary port closures in China and elsewhere. This and the earlier Ever Given incident in the Suez Canal severely affected shipping schedules. As the situation got worse and Covid closed port facilities ships were left queuing to unload cargo. In some cases this added 14 days to the trip. In September ships waiting to unload cargo in Los Angeles reached above eighty. Delays are very costly. Take a look at my earlier article ‘Where’s My Box’ to see the types of costs incurred e.g. demurrage. For each day you cannot unload cargo you are paying to sit in line and it has a knock on effect elsehwere in the supply chain. Shipping rates rise as a consequence.

Labour Shortages in the Field and in the Trucks

There have been labour shortages for harvesting crops in the UK, EU and the USA. It is a potential problem for the future of food supply chains. In the UK it has been estimated there are around 500,000 people needed to work in the food, retail and hospitality sector. The US is experiencing similar labour shortages as the economy opens up. In the EU too there are labour shortages. All these shortages will lead to pressure for higher wages. This pressure will increase when governments attempt to increase taxes to pay for public sector costs during the pandemic. Consumer Price Index (CPI) the main measure of inflation currently stands at 3.2 per cent and the Bank of England has indicated it expects it to reach 4 per cent by the year end. This may appear optimistic given what food retailers are signalling with the strain on their supply chains. During the pandemic it is estimated that there HGV driver shortages increased from 20,000 five years ago to 100,000 today. During the past year disruptions at DVLA and DVSA testing have exacerbated driver testing and held up license applications. Some estimates suggest as many as 40,000 people have not been able to get their HGV license in this period.

Resilience

It is necessary to know the root cause of disruptions before you can set about the task of solving them. It may also be useful to understand the temporal nature of the problem before you can provide solutions. Is the problem one you have to put right immediately? Is the problem one that can wait a little time so you can be clear about a resolution? In supply chains techniques such as the five why’s were employed by Toyota. The idea was to ask why something occurred. For example, why are we out of stock of component A. The answer might come back because the supplier failed to deliver on time. You then follow up with another question – why did the supplier fail to deliver on time? Answer comes back from the team – because the ship carrying the components ran into difficulties at sea and was delayed by two weeks. The idea is to continue probing until you get to the root cause. Generally, Ohno and others thought that it would take no more than five Why’s to find the cause. Some people criticised the simplicity of this technique but it can prove useful in some circumstances. The why questions are often combined with the Ishikawa or Fishbone diagram to find root causes and obtain a visual of cause and effect. Root cause analysis has many applications. You will know from your own experience that to find an electrical fault you often employ root cause analysis almost reflexively without thinking about techniques explicitly.

Building resilient supply chains comes from knowledge, experience and practical wisdom. You must first identify the problem. You must see if the problem is contained to a single event or a particular location before moving on to examine wider interconnections. If the problem is persistent and is spread throughout the system you may have a systemic problem. It is essential to know the cause of the problem before you offer solutions. Is the cause within system or external. For example, a flood that disrupts all transport in a country would be external. A flood in a particular warehouse at a specific location is within the system.

People have the capacity to respond to the past, adapt to the present and build capacity for the future. In life we all face many challenges and we have to be resilient to meet them. It is surely time to plan better, act faster and promote policies that will improve the situation.

Listen to Retail Logistics, Disruption and Resilience

Something for you, your colleagues…students and people in business…Why not share…

21 Episodes include:-

• Disruption Food Security and Environment
• Developing Cost Effective Teams
• Supply Chain Cost Concepts
• Transport at Zero MPH
• Where’s My Box?
• Ten Trends for Supply Chain Advantage
• Pressing Problems
• Predicting the Unpredictable
• The CEO and Supply Chain Pro’s
• Digital Transformation and Blockchain Technology
• Supply Chain Strategies
• Sourcing Strategies
• Volumes and Volatility in Supply Chains
• End to End Supply Chain Analytics
• Market Driven Customer Focused Supply Chains
• Ever Given – Supply Chain Disruption in the Suez Canal
• Supply Chain Resilience and Risk
• Post Brexit Supply Chains UK-EU
• Value, Customers and Service
• Complexity and Disruption
• 7 V’s Explained

400 Hours of Content

New episodes every week.

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Ever Given is on its way

Source: Vesselfinder

Ever Given Free at Last!

A number of tugs attached cables and working together managed to pull the ship from where it was lodged to relaunch the stranded ship. This was after dredging and removing tonnes of sand from underneath the hull. Ever Given has finally been freed and is now on its way to the an area know as the Great Lake where technical inspections will take place. Meanwhile other ships will be able to pass. Ever Given is travelling at a steady speed of just over 6.7 knots per hour. It is unclear if it is being towed by tugs or under its own diesel engine. Either way this is very good news! The Marine Salvage Team, the Suez Canal Company and everyone involved have worked tirelessly to refloat the vessel after it was grounded six days ago wedged side to side across the canal.

Source: Vesselfinder – Ever Given enters the Great Lake so the blockage is at an end

This of course is just the important first step of getting traffic moving through the canal. There is a big backlog of ships stuck either side of the point at which Ever Given was grounded. It will take some weeks to get supply chains back to some degree of normality. There will now likely be some backlog at ports where ships caught in the delay will have to wait to enter and be unloaded.

You can read more about the six days and the ship that stopped global supply chains at:

https://www.linkedin.com/pulse/ship-holding-up-global-supply-chains-suez-tony-hines

and on this site – see below.

Ever Given has moved but remains blocking the Suez Canal

The position of Ever Given at 10.30am Monday 29th March 2021 Source: Vesselfinder

The operation to refloat the grounded ship blocking the Suez Canal has been in progress since the accident occurred last Tuesday 23rd March. The stern of the ship has now been freed from the shoreline. The Suez Canal Authority reports the ship has been corrected by 80 per cent. This remains a complex operation and work to move the ship further is expected to recommence at 2pm UK Time today. The ship will need to be checked for damage to the hull by divers before restarting engines to get the ship on its way if possible. The hope is this will resolve the issue.

Peter Bodowski head of the Dutch Salvage Company commented that dredging mud and sand from the bough had brought some progress before he went on to say that containers may need to be removed if this did not work to get more movement.

Some 360 plus ships waiting to recommence their journeys through the Suez Canal will be hoping everything goes to plan. About $10 billion is the value of goods moving through the canal daily. You can read more about this clicking the link below:

https://www.linkedin.com/pulse/ship-holding-up-global-supply-chains-suez-tony-hines

Supply Chain Disruption – In the News

Photo by Dominic Alves Flickr Global Air (Blue) and Sea Routes (Green)

The photograph shows global air and sea routes. These shipping lanes and air routes move goods throughout the world and are critical to the effective functioning of supply chains. Forty per cent of world shipping passes through the Malacca Straits connecting the Indian Ocean with the South China Sea and twelve per cent passes through the Suez Canal a major route from Asia to Europe.

Disruption to shipping routes

Ever Given is the name of the ship in the news this week causing severe disruption to shipping through the Suez Canal. The ship belongs to Evergreen a Japanese company. There are reportedly 230 ships (and growing) caught up behind the Ever Given awaiting passage to the Mediterranean Sea and on to European ports. Oil, gas, consumer and industrial products are among the many goods held up. Goods valued around £10 billion per day pass through the canal. The 400m-long (1,300ft), 200,000-tonne vessel is lodged sideways across the canal. It happened during high winds and a sandstorm conditions which are not that unusual in the region. Some have questioned the competence of the helmsman but it may simply be that this ship was too big for the narrow canal. Such a blockage has not happened previously but of course these huge container ships are much larger than many that previously travelled through Suez.

Photo by Chris Lovelock on Flickr – Container Ship Passing safely through the Suez Canal

There was a failed attempt to refloat Ever Given by marine engineers and salvage operations on Tuesday 23rd March. Suez is the shortest route from Asia to Europe linking the Red Sea with the Mediterranean Sea. Avoiding Suez adds about two weeks to the journey sailing around the Cape of Good Hope, South Africa. Salvage experts say it could be weeks before they are able to move the ship. Some are more optimistic and expect to dig out the sand to get movement in a shorter time-frame of days rather than weeks. At this point it remains to be seen. Delays will cost millions and expect big insurance claims from suppliers and customers impacted by the disruption. The longer trip around Africa will also have further risk and cost – for example, extra fuel and risks from piracy. Twelve per cent of global trade passes through Suez. It is likely that shipping freight rates will increase as there is a shortage of ships caught up in the crisis and those that sail from the Far East will need to take the longer route around Africa.

MV Ever Given blocking the Suez Canal 25th March 2021

It takes some skill to get a ship blocking a canal side to side like this. Let’s hope it is not something to be repeated. One alternative being considered is to remove the containers to lighten the load but this is an expensive operation that is likely to take longer given there are no facilities immediately available nearby to lift the containers.

Listen to Chain Reaction the podcast all about supply chain advantage

Astra Zenica’s Covid 19 Vaccine is in the News this week

Photo by Artem Podrez on Pexels.com

A rumbling dispute originally framed as a political argument between the EU and the UK erupted as shortages of the Astra Zenica vaccine are said to be limiting the EU roll-out. The EU was of course slow to approve the Astra Zenica vaccine and there have been misleading comments about the efficacy of the vaccine which held up the EU vaccination programme in several countries including France, Italy, Germany, the Netherlands and Denmark. It was reported in Nature the Journal that efficacy rates of 76 per cent were confirmed in trials by Astra Zenica. There had been a claim that a previous statement claiming 79 per cent efficacy was misleading but this was clearly unintentional in a rushed press statement with the company keen to give assurances to the wider public and EU that the vaccine was effective. If Astra Zenica’s vaccine really is in question why is the EU now so keen to get its hands on the vaccine saying its dispute is not with the UK but with the company who they claim are failing to meet their contractual obligations. This is really not helpful. There may be supply chain problems but instead of carping the EU would do better to see how it could help and support the roll-out to its citizens so that everyone is protected.

The company clarified that the most recent figures were estimated 15 days or more after participants received their second dose of the vaccine, and were consistent across all age-groups including people aged 65 years and older. None of the vaccinated participants developed severe disease or were hospitalised.

Nature 25th March 2021 – Latest results put Oxford–AstraZeneca COVID vaccine back on track

The Astra Zenica vaccine is clearly a triumph of science. Yes we know supply chains can be difficult but this is a completely new product brought to market in less than a year with increasing demand on an unprecedented scale. Most supply chains would struggle in these circumstances. What is remarkable is that the supply chain is effective despite some reported production difficulties in scaling up production and distribution. This Covid 19 vaccine has 200 components (including:  glass vials, filters, resin, tubing, trays, packaging and disposal bags in addition to the vaccine itself) supplied from 80 countries with around 20 production centres. One of those manufacturing sites in the UK is Wockhardt UK, in Wrexham, North Wales where they have set up at speed to produce vaccines for the UK government supply contract. One of the largest deals struck by AstraZeneca, UK was to manufacture 2.9 billion doses using 25 firms in 15 countries (Source: Nature 25th March 2021). The largest partnership contract is with the Serum Instititute in Pune, India which is scheduled to produce one billion doses. It is a success story given the quick response to develop, licence and distribute the vaccine at cost on a non-profit basis to millions of people world-wide. The US Drugs and Food Administration Agency is likely to approve the vaccine within weeks for roll-out in the US.

One of the biggest threats to vaccine supply is the political threat to block exports to other countries if conditions worsen or countries do not think they are getting their fair share. The worst that could happend is that bureaucrats intervene and disrupt supplies. Interventions in supply chains never work out quite as planned as students of the supply chain discipline who played the ‘beer game’ as part of their learning about systems dynamics (Bullwhip effect) will happily tell you.

Turbulence in Chip Supply

Apple’s IPhone 12 launch was delayed by two months because of problems getting sufficient microchips to manufacture handsets. Chip supply shortages have emerged as a big threat to the production of electronic goods including tablets, phones, computers, televisions and car manufacture. These shortages are likely to mean higher prices for supplies.

Photo by Miguel u00c1. Padriu00f1u00e1n on Pexels.com

What started as a temporary shortfall as chip manufacturers affected by the Covid pandemic closed or slowed production has grown into a serious disruption in production supply chains for all types of consumer electronics. It is not only impacting the elctronic industry but it has seriously disrupted vehicle manufacture as many modern cars are now fitted with sophisticated electronics to manage fuel and engine systems as well as satnav and in-car entertainment. Chips with everything in the contemporary world has made supply chains vulnerable as they compete to get the components they need to manufacture goods.

Supply Chain Disruption

One thing is certain and that is disruption will occur at some point in any supply chain. There is a need to be ready for disruption when it happens by planning for disruption and developing strategies to cope with disruption. Depending on the type of disruption it is worth being prepared for the inevitable and learning from what other organizations do to make their supply chains resilient and overcome problems. This usually requires a good dashboard system that alerts you to potential problems before they happen. An ability to sense threats is critical to becoming resilient. You may be able to have plans B or C ready to go when needed. Felxibility and adaptability are key to overcoming the disruption.