Entries tagged with “supply chain”.

When Eyjafjallajokull volcano erupted on April 14th, the sky’s above Europe looked like the US sky’s after 9/11.  No major aircraft flew because of the danger to the aircraft, crews and passengers that may fly into the cloud and have all engines fail.  The result of this was passengers being stranded, product not moving, and the airlines loosing more than $200 million a day.  Who knows what the impact to other businesses was, due to delayed shipments, cancelled meetings, extended stays, and lost productivity to businesses around the globe.

This was the result of a continuity plan that has been put into place and has worked for more than 20 years.  Governments, airlines and aircraft manufacturers have long known what could result in flying a plan through a cloud of volcanic ash.  The engines can temporarily shut down because they are clogged with the material, causing the plane to lose power and potentially crash.   Because of this known hazard, a contingency plan was created that vectored planes around the ash plume to assure safety.  This contingency plan has been very effective, and  perhaps to effective.  According to a report in Bloomberg Businessweek (The Plume and The Planes), Marianne Guffanti, a vulcanologist, is quoted : “That’s kind of biting us in the back right now because the more successful we are the more people think there’s no problem.”  

It seems that these rarely occuring isolated environmental issues become forgotten about as time passes because they are either so monumental and low probablility that the feeling is not to put a lot of time building contingency plans that will never go into place, or the impact cannot be expressed in a way that individuals can comprehend.

Because the program put in place prevents a catastrophic accident, there is no “concrete” view of what could happen.  Any occurrences that have occurred are 30 years ago, and forgotten in almost every one’s mind (how many people not directly affected remember how many days the air space above the US was closed after 9/11?)  The challenge I see is that many corporations and individuals do not see the potential impact to them (from roller coaster like flights to death) and only see the impact that occurs from protecting them from these risks (delayed arrival, broken plans, lost profits and inconvenience).  

There is also a challenge to the airlines and transportation providers as well.  How they handle the flight stoppage will reflect on their reputation and could cause loyal customers to look at alternative carriers in the future.  How would you react to these different vendor scenarios?

The carrier throws their hands in the air and says “The government has closed airspace, there’s nothing I can do, deal with it.” and lets their passengers or customers fend for themselves while waiting for the sky’s to clear may have a significant backlash. 

The carrier that apologizes, and looks for ways to ease the burden (hotel and meal vouchers, establishing update phone numbers and web sites, offering assistance, etc.) or looks for ways to get the product shipped (alternative movement to an unrestricted area and then flying out from that location). will have customer coming back for more.

In my mind it’s pretty simple.  The supplier who works with you and shows an appreciation for your business and concern for your inconvenience will continually maintain my business over one who shows disinterest.

Every business thinks of the major risks that they face during the course of the year, but there are some risks that are not given the proper attention that is deserved.  Here’s a listing of 10 “Rodney Dangerfield” risks that don’t get the respect they deserve.

  1. Reputation – Got a plan in place if your company or brand reputation is soiled? 
  2. Succession Planning – Is there a plan in place if key people in your organization are no longer there?  Who takes their place, who is the knowledge expert to keep that part of your business going?
  3. Identity theft – It doesn’t just happen on credit card transactions.  What’s the plan if your HR system gets hacked and social security numbers of your employees along with other sensitive information is taken?3. 
  4. Economic instability – Lots of people didn’t see the economic downturn coming, did you plan for the changes in revenue? 
  5. Pandemic fever – Real or imagined, have you thought about how a pandemic (Swine, Avian, Spanish, blue flu or other global, national, regional, or local illnesses) will affect your day to day operations?
  6. Fraud – You have probably put great controls in place at many of the financial touch points.  What about some of the less obvious ones?
  7. Sales and usage tax – State and local governments are looking to collect all the   to them, are you collecting or paying your fair share on things you buy and sell?
  8. Technology - Keeping up on the latest trends in your industry to see if you are ahead, even, acceptable or behind the technology wave.   Are you providing your customers with acceptable technology for the product or service you are providing?
  9. Government regulations – This doesn’t have to be just the local government, but also in the countries you are sourcing products or services from.  Are you in tune with legislation that may affect how you conduct business? 
  10. Supply chain disruption – How do you react to product lost in transit, a port shut down because of a longshoreman’s strike, and other threats to getting your product to market.  Remember, supply chain is not just about products, it can also be about services, such as the IT contractor for the new project not being available to begin on the expected start date, or your project manager taking a bit longer to complete their previous project than anticipated.

So there’s 10 risks that fly under the radar, and I am sure that you have run across many more.  Let me know your thoughts, and other items which should be added to the list.