Posted on 30 Aug, 2012 by John Mayes
- A factory under siege from disgruntled workers, with the management barricaded inside
- A metal processing plant in the middle of farm land and all vehicles unable to move in or out
- A company on top of a hill surrounded by flood water but for just one road out
Yes, all were unable to continue to supply their products, but also all are examples of claims I have seen of companies ‘declaring’ force majeure or as they tried to claim ‘events beyond their control’.
There are many reasons why a supply chain can fail and not always as dramatic as a factory under siege, but all of these are genuine examples of supply chain disruption. Whilst we can all identify risks and often take appropriate mitigating actions there are always causes that cannot be anticipated.
Unplanned and unforeseeable events will take place, it is something you should accept and whilst you can plan and prepare for the most likely of causes there comes a point when you need to accept that disruption will happen. Who could have predicted volcanic ash would bring airports in the
UK to a standstill? or that tanker drivers threat of industrial action would create some panic buying of fuel?
Often the specifics of the risk itself can be irrelevant; as once you accept that there could be a disruption and have solid recovery plans in place then it is the speed and agility of the response in retrieving the situation that separates the best from the rest.
At Paragon Group we deal with risk on behalf of our customers, indeed we see this as a key part of our role and responsibilities and aim to ease those sleepless nights of our customers.
One company in the group, ISO 9001 and AS9120 accredited Vigilant Components, provides component sourcing, testing, counterfeit detection and verification services as well as supply chain management and point-of-use delivery options. Paragon Electronics Group also offers Paragon Electronics Components’ innovative manufacturing solutions. The well proven ‘best-fit’ approach, supported by partnerships with specialist EMS companies, centres on decoupling the supply chain from the assembly process to provides a unique solution to the challenges associated with outsourcing electronics manufacturing. Our model is based upon two fundamentals; Rigorous management of supply chains is absolutely vital to ensure that all product is available when required, with the ability to respond dynamically to changes in demand; and when it comes to contract manufacturers,
one size does not fit all.
Supply Chain risk probably dates well before the 17th century but the writer Francis Bacon may have been listening to one of the first Supply Chain Managers when it is claimed he said;
“If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts he shall end in certainties.”
Did he know then that his name and writing skills would be to some people forever dogged by uncertainty?
As to the three companies what happened next?
All are real companies and real events.
The Russian factory was laid under siege until the police decided it what time to break up the dispute. It transpired that the issue was over ownership and the siege was led by a senior manager who had been fired the previous week. We resourced away quickly and Force Majeure was not accepted.
The Metal processing plant was surrounded by farms affected by the outbreak of foot and mouth disease. Despite much legal debate at the time FM was accepted in this case, however the situation was quickly resolved.
The flooded or not flooded company claimed it was unable to supply, not because it couldn’t deliver product but from the nearby town its workforce were unable to reach the factory. FM in this case was not accepted. Canoes were not provided.
Whether legally these were the right decisions I am sure could be disputed, but in each case alternative plans were hastily put in place anyway.
We have to accept that uncertainty and risk is inherent within supply chains our approach can be summed up in the following quotation by Francis Bacon:
“If a man presumes certainty, he shall end with doubts, but if he will be content with doubts, he will end with certainties”. Francis Bacon 1561-1626
By being content with doubts and uncertainties and by planning appropriately we can manage our supply chains with a higher degree of certainty.
Professor Richard Wilding is Chair (Full Professor) in Supply Chain Risk Management at Cranfield School of Management U.K. one of Europe’s leading business schools and hosts the Cranfield Supply Chain Risk Forum www.supplychainriskmanagement.co.uk he can be contacted through www.richardwilding.info
Topics: Supply Chain