You’ve suffered a supply chain disruption: Now what?

This is an excerpt of the original article. It was written for the March-April 2022 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2022

Yesterday, I hosted a webinar on the steps supply chain leaders are taking to redesign their supply chains to cope with this period of unprecedented demand. Earlier last month, I attended the Manifest conference in Las Vegas. The exhibitors featured a lineup of supply chain startups while the attendee list was dominated by venture capital firms looking to get in on the action in our booming industry. This morning, one of the lead news stories is about another disruption threatening to bring global supply chains to a halt:

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In March of 2011, an earthquake struck central Japan. One of the affected companies was a supplier named Riken Corporation, surely an unfamiliar name to most. Within days, however, 70% of Japan’s auto production was affected because Riken couldn’t supply a $1.50 piston ring. Producers that relied on pistons like Toyota, Honda, Nissan and Mazda—really any company that made a product with an engine—had no buffer inventory or backup suppliers, something that ensured the disruption would be felt quickly and severely. Toyota temporarily shut down production at all of its Japanese assembly plants.

Several years later, a plant in Germany that makes almost all of the world’s Nylon-12 suffered a catastrophic explosion. Nylon-12 is a critical resin for producing fuel lines and other automotive brake components. The explosion that ripped through the facility destroyed about half of its production capacity. Within hours automotive OEMs across the globe had established crisis management teams to search for new supply sources and material substitutes.

These disruptions predated the pandemic by nearly a decade.

Welcome to the world of supply chain disruptions. Like the bumper sticker, we all know that “stuff happens.” And, as these examples illustrate, disruptions are often newsworthy events. At other times they are more local and subtle, such as when a supplier chooses to no longer serve a customer or a truck fails to make a delivery. Whatever the scope or scale of a disruption, when they occur reaction time is critical. The need to determine as quickly as possible a company’s vulnerability, risk exposure and courses of action become paramount. This article presents a set of questions that must be examined whenever an organization experiences a supply chain disruption that could affect operations.

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