Newest supply chain risk: Zombies????

Published August 31st, 2009 by John Westerveld 2 Comments
Zombies as portrayed in the movie Night of the...
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Those darn zombies, they keep turning up where we least expect them!  Not satisfied with haunting dark caves and grave yards, they’re now showing up in shopping malls, classic literature and our cities.  This time, however, they’ve gone too far!  They’ve infested our supply chains!

Over at the @Risk blog, there is a post about a recent Reuters article which explains that supply chain zombies could seriously affect your ability to deliver.  Ok, so what’s a supply chain zombie?  According to the Reuter’s article, a supply chain zombie is a supplier that has been significantly impacted by the downturn, is significantly undercapitalized and are just limping along.  However, as soon as demand starts to increase, they will fold because they can’t get the funding to retool and restock to meet the demand.  They are effectively dead, but they don’t know it. They’re zombies.   More disconcerting is that YOU may not know they’re dead – until you start ramping up demand – at which point it’s too late.

As discussed in earlier posts; ‘Supply chain risks change as economic tides turn,’ ‘Taking action now to prepare for the recovery’ and ‘The right supply chain priorities during the downturn position you for future success‘, there are many things that companies can do during economic downturns to ensure that they are positioned for success when things turn around.  Assessing areas of supply chain risk is one of those things that should be done now (and given the coming zombie invasion, is all the more urgent.)

Supply chain risk assessment starts with identifying what suppliers are most important to you;  What supplier parts contribute most to your revenue?   What suppliers contribute most to your revenue?  Once you have these key parts and suppliers identified, you need to start assessing risk.  For key parts, do you have alternate sources?  For key suppliers, what is their financial risk?   If you are already doing supplier analysis, but your last review was more than a year ago, you need to revisit those suppliers. A lot has changed in the last 12 months. 

For those suppliers at risk, you need to make a decision.  Do you help that supplier ramp up?   Or do you abandon them and find another supplier?  That decision is really based on the history you’ve had with that supplier.  Great suppliers are hard to come by and it could very well be worth your while to help the great suppliers survive.

Now…if the zombie hoard (real zombies, not un-dead suppliers) really do rise up,  Amazon has got you covered with their Zombie Survival Kit.  Also, Ottawa researchers have developed a mathematical model of the Zombie infestation which should help the disaster planners.   Let’s hope the zombie uprising never happens, but it doesn’t hurt to be ready!

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2 Responses to “Newest supply chain risk: Zombies????”

  1. Mary Ulmer

    Very entertaining and informative

  2. Ron Freiberg

    Speaking exclusively from personal experience in the company I am currently with; the elimination of reliance on the so-called Zombie supplier was the cornerstone of our supply chain rebuild for the future, started literally the week the markets and financials crashed in October 2008. If we can remember back that far, we had just come out of a massive balloon economy and we had already targeted many of the zombie suppliers as those who could not support demand during the balloon also would be those that could not support a fast 30% to 40% renewal to normal business conditions whenever that occurred. These suppliers were targeted for removal with materials consolidated with those could support improved business conditions. The one good approach our company took was to not eliminate significant resource in the supply/purchasing groups over the last 10 months so we could accomplish this rebuild of the supply chain. This rebuild is not totally complete however we do have the new supply base up and running and are confident going forward that we can meet demand. The point really comes down to this; those that couldn’t support you during the good times probably are those that will not lend support during economic expansion, they should have already been identified and be on the list of zombies.

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