Posts categorized as 'Supply chain risk management'

Confessions of a 50-Year-Old Hacker

JohnWesterveld

Hackathon judgesLast week was the Kinaxis solutions development hackathon. In a hackathon, people form up into groups and within a one-week time frame, identify a market need, develop an approach to addressing that need – in many cases prototype solutions – then present those ideas to a leadership team. This year was extra fun because we used a “Shark Tank” (or “Dragons Den” for us Canadians) approach (without the snarkiness that makes the TV version so popular).

As I sat and watched the presentations, I was blown away by the depth of supply chain knowledge and the amount of creativity on display. I wouldn’t be surprised if one or more of the ideas eventually becomes another of the features that make RapidResponse great.

Our team put together some ideas around supply chain risk management. We addressed supply chain risk in two ways; the leading indicators that show when you are at risk, and a simulation to see how well your supply chain can respond to a major event. The leading indicators range from single sourcing risk to global supply risk, with a number of other factors included as well. Each of these metrics help you identify where you could potentially be at risk.

The other part of our project was based on a concept I wrote about a year ago or so; the Chaos Monkey. The concept here is to go beyond the typical metrics and indexes and to prove how resilient your supply chain is to an actual disruption.

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Can One Broken Bridge Cripple Your Supply Chain?

AlexaCheater

Nipigon River Bridge

That’s the question I’m asking after one very important, and now very broken, bridge in Northern Ontario failed to stand up to the rigors of a cold Canadian winter earlier this month. The newly built Nipigon River Bridge is a vital part of the Trans-Canada Highway system, the main roadway linking Canada’s east and west coasts. And on Sunday, January 10 it was completely shut down, bottlenecking traffic and forcing commercial shippers to detour several hours out of their way and through the United States since there’s no other way around.

According to news reports parts of the bridge buckled, causing a grinding halt to the passing of the approximately 1,330 commercial vehicles, carrying more than $100 million worth of goods, that cross over it every single day. Thankfully, no one was injured when it happened.

While one lane of the bridge has since re-opened, allowing at least a trickle of traffic to flow across, larger transport vehicles are still being detoured, and the cost to the businesses impacted by this logistics nightmare is mounting. One federal politician is calling it a “wake-up call” adding this is a serious choke point to the Canadian economy. I’d add it’s yet another reminder to businesses to make sure their supply chains can handle the unexpected.

Would your supply chain be able to respond and recover quickly and efficiently if potentially hundreds of large shipments failed to reach their destinations on time? Is an unanticipated delay like this part of your supply chain risk plan? If not, perhaps it should be.

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The Cost of Climate Change on Your Supply Chain

AlexaCheater

The impact of climate change changing green grass to dry desertOn the heels of the United Nations Paris Climate Change Conference, now seemed like an appropriate time to revisit an often talked about supply chain topic. The impact of climate change on your supply chain operations.

Natural Disasters

Tumultuous weather is perhaps the most commonly thought of supply chain risk related to Earth’s climbing temperature. Undoubtedly, the impact of wild weather is substantial. An increase in the number of devastating hurricanes, earthquakes, wildfires, floods and droughts should be worrying to everyone, not just those concerned for their supply chains. In 2014, three of the top five biggest supply chain disruptions were related to natural disasters. Typhoon Halong in Southeast Asia capped the list, causing a 41-week disruption at a cost of more than $10 billion for companies doing business in the region. Are we looking at a future where Mother Nature is responsible for the majority of disruptions?

Companies will need to evaluate the risk of losing a supplier in a specified geographic region, and whether there’s a case that needs to be made to diversify where raw materials are coming from, having multiple suppliers, and how far to take contingency plans. The same can be true for evaluating different transportation options. Severe weather can cause substantial delays, or even total shutdowns, of certain routes or modes of transportation. Supply chain managers need to have backup routes and options available and at the ready, and need to be able to quickly and effectively run scenario simulations to determine which course of action will allow for the smallest overall impact.

Another thought I had is whether these severe weather phenomenon will cause shortages of certain raw materials, like what we’re currently seeing with cocoa. What will that do to already unstable price fluctuations in some global commodity markets? Will supply chains be able to cope with the potential added costs? Can we expect to see an increase in civil unrest (and the associated supply chain challenges) as communities fight over dwindling resources? A good supply chain risk plan should take into account all of these factors.

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How Prepared Are You Really? Supply Chain Black Swans

AlexaCheater
  • by Alexa Cheater
  • Published

Supply chain black swanSupply chain risk. It’s a topic that just never seems to go away (nor should it!). Everyone and their uncle has probably read at least one article, blog, research report, etc. on the topic. We’ve covered it here extensively on the 21st Century Supply Chain blog, and Kinaxis has even produced a great infographic about it. There’s no denying it’s a very important subject when it comes to good supply chain management.

Recently however, I’ve been thinking about supply chain risk in a whole other light. Thanks mostly to a fabulous guest post by MIT’s Yossi Sheffi on the Wall Street Journal, which I had the good fortune to stumble across. In it, Sheffi talks about the concept of a ‘black swan’, no not the risk of slightly unstable ballerinas invading your supply chain, but rather a term popularized in 2007 by Nassim Taleb that’s used to describe occurrences that are thought to be impossible.

At first blush, it all sounds a bit familiar. Make sure you prepare for the unexpected. Got it. We’ve long been proponents of making sure your supply chain risk management strategy targets three key areas: anticipated risk, uncontrolled anticipated risk, and unanticipated risk. Surely this concept of a black swan fits squarely into the third category, which is characterized by an event that is entirely out of our control and hard to anticipate and plan for. And it does.

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El Niño May Have Your Supply Chain Partying Like It’s 1997

KirstenWatson

El Niño phenomenonIt’s not often that a weather phenomenon becomes part of the pop culture zeitgeist. But that’s exactly what happened in the late 1990s, when El Niño became a household name—and even a character played by Chris Farley on Saturday Night Live.

El Niño is a blanket term for the effects of an unusual warming of water in the Pacific Ocean that occurs once or twice a decade. A massive El Niño occurred in 1997-1998, unleashing record rains in California, deadly tornados in Florida, and a brutal drought in Indonesia, thus landing the term firmly on the radar (no pun intended) of millions of people around the globe.

With its whimsical name, El Niño became a punchline—the cause of anything and everything that might be going wrong (hence that Chris Farley sketch on SNL). But El Niño was no joke then. And it still isn’t, despite the headline of this post. That liberal paraphrasing of a classic Prince song refers to particularly strong El Niño conditions predicted by the National Weather Service for winter 2015-2016—the likes of which haven’t been seen since 1998.

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3 Ways Crowdsourcing Is Revolutionizing Supply Chain Management

KirstenWatson

Visual representation of crowdourcing using heads made of mechanical gearsThe term crowdsourcing—the process of obtaining ideas, services or information by soliciting feedback from a large group of people—has existed since 2005. But its fundamental concept predates the name by centuries. In 1714, the British government offered the public a monetary prize to the person who created the best solution for measuring a ship’s longitude.

As has been this case with so many concepts, the internet has given crowdsourcing phenomenal reach and influence. We’ve already seen the significant impact that crowdsourcing has on modern business product development, production and delivery, and that effect will undoubtedly only grow over time. Here are three ways that crowdsourcing is revolutionizing supply chain management today—and in the future.

Crowdsourcing increases on-time, cost-effective delivery.

Amazon consistently ranks on or near the top of lists touting the best supply chains—and for good reason. It drives an innovative fulfillment strategy through its vast distribution center network and independent delivery fleet that enables it to guarantee two-day delivery. Amazon’s achievements in supply chain management have led consumers to establish an incredibly high bar for timely and accurate product delivery. The Amazon customer satisfaction standard has changed the game for every retailer of every size.

Crowdsourcing transportation presents a solution for smaller enterprises to compete in this environment. One such service provider is Cargomatic, who connects local shippers with carrier companies who have extra space in their trucks. The “last-mile” phase of the traditional fulfillment process is often the most expensive (accounting for as much as 50 percent of a company’s logistics costs), but crowdsourced transportation can sometimes enable same-day delivery at the cost of standard shipping. And crowdsourced traffic apps like Waze are helping a multitude of delivery drivers find the most efficient routes with real-time help from other drivers.

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Modern Slavery in Today’s Supply Chains

AlexaCheater
  • by Alexa Cheater
  • Published

A farmer represents part of the agricultur supply chainI used to think slavery was, for the most part, a thing of the past. An abhorrent practice that was abolished for very good reason, and a constant reminder that human life has tremendous value and as such should be respected and honored. I used to think there was no way slavery would ever have a place in modern society, that no one would allow such a practice to exist outside the most desolate and desperate places on Earth. I used to have my head buried in the sand.

The sad reality is that slavery, in all its unpleasant forms, exists much closer to home and in much greater numbers than I ever expected. Traces of it can be found virtually everywhere. In the clothes on your back, the shoes on your feet, the food that you eat, and even the computer, tablet or smartphone you’re likely reading this blog on. How? Through the supply chain.

Modern slavery is one of the supply chain industry’s dirty little secrets, but thankfully, governments in the US and UK are attempting to wash it clean, working to put a stop to a problem that should never have been allowed to exist in the first place. Or at least, they’re trying to.

As the Wall Street Journal (WSJ) reports, new rules recently announced by British lawmakers will require companies “to give an annual disclosure detailing efforts to root out slavery and human trafficking in their global supply chains.” The new provision, which is part of the broader Modern Slavery Act enacted in March, will impact more than 12,000 UK companies whose global revenues each total more than 36 million pounds. It’s based on California’s Transparency in Supply Chains Act, which was passed in 2010.

The problem is, both laws only require companies to disclose their use of slave labor, not actually put an end to it. So how is this going to solve the supply chain slavery issue?

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From Grower to Garden: The Complexities of the Nursery Supply Chain

AlexaCheater

A woman holding a plant brought by the nursery supply chainToday is ‘Take Your Plant for a Walk Day’ (yes, apparently that is a real thing), and in honor of houseplants everywhere I thought I would look at the supply chain of an industry that has long fascinated me – the nursery industry. What exactly goes in to getting all those lovely shrubs, trees and flowers from the grower to the garden?

Let me start by saying that I personally do not have a garden. Why? Because while I love plants, they do not love me. No matter how enthusiastically the very knowledgeable staff tell me that this plant or that one can survive anything, the sad truth is none has survived my very, very black thumb, despite years of trying.

That of course does not stop me from visiting my local nursery to see what they have in stock. From seeds to shoots to seedlings and fully-grown shrubs, trees and flowers – the complexities of getting these plants to the end consumer are many.

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