Adapt Supply Chains to Survive Disruptions

Adapt to Survive Supply Chain Disruptions

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Today’s Agenda
 How Are Today’s Global Supply Chains
Being Impacted?
 Managing Business & Operational Risk
 Minimising Supply Chain Risk Through
Operational Changes
 How Can B2B Help Minimise Supply Chain
Risk?

How Are Today’s Global Supply
Chains Being Impacted?

Supply Chain Disruption is Becoming a
Recurring Theme….
Today’s supply chains need to be highly resilient, scalable and
flexible to meet the challenges of doing business during a period
of significant disruption

Icelandic Volcano - 2010
Much of Europe’s airspace was shutdown due to the spread
of volcanic ash in the atmosphere. As a result, global air
freight shipments were severely affected.

Japanese Earthquake - 2011
Japan’s East coast was severely impacted by the earthquake,
many factories and utility infrastructures were destroyed
and logistics networks ground to a halt.

Japanese Tsunami - 2011
The Japanese Tsunami caused more longer lasting damage to
Japan’s infrastructure and as a result supply chains have
been impacted for more than 12 months.

Thailand Floods - 2011
Many high tech companies were impacted by the Thai
floods, at one point it was estimated that up to 90% of the
world’s supply of hard disks had been affected.

Thailand Floods - 2011
Honda’s factory was severely affected by the floods and as a
result millions of dollars worth of cars had to be written off.
Honda has now rebuilt the plant.

Somali Pirates - 2011
Somali pirates have hijacked oil tankers and container ships.
Goods exported from the West coast of India have had to be
re-routed around the problem areas.

Sinking of the Rena Container Ship - 2012
Ocean freight is susceptible to disruption when a major
container ship runs in to trouble. Most of the containerised
cargo has to be written off.

Sinking of MSC Napoli - 2007
BMW Customer Services – “Sorry Sir, we cannot seem to
trace your new motorbike which was enroute from our
factory in Germany!”

Chinese Restriction on Export of Rare
Earth Materials - 2011
China controls up to 90% of the world’s rare earth materials.
Government export restrictions impacted the shipment of
components across high tech supply chains.

UK Strike by Fuel Tanker Drivers - 2012
UK businesses disrupted by ‘potential’ wildcat strikes by
2000 fuel tanker drivers. The retail and grocery industry is
always first to feel the pain.

Factory Explosion Causes Global
Shortage of PA12 - 2012
Explosion at Evonik Industries factory in Germany causes
global shortage of CDT, a key ingredient of PA12 which is
widely used across the automotive industry.

Managing Business and
Operational Risk

Business & Operational Risk and their
Domino Effect
Source: Global Risk Report 2012 – World Economic Forum

Example of Organisation Resilience
Based on 18 Metrics

Types of Supply Chain Risk
Source: APICS 2011 Supply Chain Risk Report

How Well Do You Know Your Supply
Chain?
Source: APICS 2011 Supply Chain Risk Report

Davos - January 2013
 Increasing supply chain related resilience is
key to sustained economic growth and
prosperity
 Minimising supply chain disruptions and
ensuring continued operations should be
high on the agenda of every company CEO
 Increased use of cloud based B2B solutions
can significantly contribute towards this
goal
‘Dynamic Resilience’
in a volatile world
The ability to bounce
back, stronger than
ever, after having been
knocked for six
Jorn Madslien - BBC

Minimizing Supply Chain Risk
Through Operational Changes

Implement Operational Changes
 Near Shoring
 Establish a ‘Global Plant Floor’
 Shift Production to New Locations
 Map Out Supply Chains/Networks
 Introduce Dual Sourcing Strategies
 Implement Control Towers/Crisis
Management Centres
 Appoint a Business Continuity Manager

Near Shoring
 Started to appear in 2009
 Initially introduced to help shorten
logistics networks
 Recent natural disasters are
encouraging more companies to
move production or sourcing
nearer to home markets

Caterpillar Moves Production Back to
North America

Establish a ‘Global Plant Floor’
 Some manufacturers have been
quick to establish alternative
production locations
 These new locations help to
spread the risk so that if one plant
goes offline, production can
continue at an alternative location

Honda Moves Design and Production of
NSX Supercar to North America

Shifting Production to a New Location
 Following the Japanese Earthquake,
other countries started to encourage
companies to relocate
research/production
 Many governments saw this as a good
opportunity to encourage inward
investment
 Significant investment in new
infrastructure/technology parks

Taiwan Emerges As Alternative Location
for Japanese Manufacturers

Mapping Out Supply Chains
 Many manufacturers have started
to map out their entire supply
chains
 Helps to locate weaknesses in the
supply chain and identify key
suppliers
 Once mapped out, contact info and
supply chain relationships need to
be maintained

Researcher Spends 3 Years Mapping Out
Suppliers For Centre Console

Dual Sourcing Strategies
 Disruption across supply chains has
led to alternative suppliers needing to
be identified quickly
 Identifying alternative source of
components/parts helps to minimise
production disruption
 Manufacturers are also likely to start
increasing buffer stocks

Implementing Control Towers/Crisis
Management Centres
 Many manufacturing companies have
implemented control towers to
monitor end-to-end visibility of global
shipments
 Recent natural disasters have led to
control towers doubling up as crisis
management centres

Appoint a Business Continuity Manager
 Increasing demand for Business Continuity
Managers
 Also known as ‘Masters of Disaster’
 Central point of contact during a period of
disruption
 Increased regulatory compliance requires
more thorough business continuity plans
 Being unprepared is ‘bad for business’

Companies are Investing in Significant
Changes to Their Business
Business/Operational Changes Information Management Changes
 Near Shoring Production
 Establish a ‘Global Plant Floor’
 Leverage Dual Sourcing
 Implement Control Towers
 Improve Business Continuity
 Improve Data Backup/Recovery
 Improve Contact Management
 Increase Supplier collaboration
 Develop Supply Chain Maps
 Review Mass Communications
Cloud based environments allow companies to
introduce these changes with ease…

How can B2B Help to
Minimize Risk?

How Can B2B Help to Minimise
Disruption Across Manufacturing Supply
Chains?
Flexibility
• Provide business continuity by ensuring data is accessible from
• Allow critical business documents to be backed up and retrieved
Reduce
Cloud B2B
Disruptions
Integration
Through
Provides
Increased
Communication
Flexibility
more than one location
Visibility
Visibility
• Provide a real time view of global shipments
through one common platform
• Should disruption occur then alternative inventory
locations can be identified quickly
Communication
• Provides a way to quickly determine post-disruption
condition of TP community
• Offers real time monitoring and follow up of
supply chain related communications

Using Community Management Tools
to Increase Organisational Resilience
Information
Management &
Communication

Community Management –
Strengthens Information Management
How do you currently manage the
contact information across your trading
partner community?, is your business
ready to respond to the disruption or
change?
Key Requirements:-
 Centralised B2B Contact Directory
 Self Service Access
 Registration

Improves Command and Control
How long would it take to assess the
condition of your supply chain following a
crisis / natural disaster?, How quickly
could you identify an alternative supplier?
Key Requirements:-
 Mass Broadcast Communication
 Secure Surveys & Web Forms
 Real-Time Visibility & Follow Up

Minimises Supply Chain Risk
Do you have the IT infrastructure in place
to assess, manage and mitigate supply
chain risk?
Key Requirements:-
 Risk Surveys & Assessments
 Scoring & Weighting
 Mitigation & Corrective Action Workflow
 Trading Partner Risk Database

OpenText™ Active Community
Improving Communication During a Period of Disruption

Thank You!
Is Your Supply Chain Prepared?

Adapt Supply Chains to Survive Disruptions

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