As Hurricane Sandy was reaching the Eastern USA, many Enterprise Risk Managers had gathered at the RIMS ERM 2012 Conference in San Antonio, Texas – often arriving on the last flights out. There was much debate about the role of risk management and business continuity when facing such natural disasters.

 

Zurich Insurance presented on Supply Chain Risk at the conference and also contributed to an interesting article on the subject and Hurricane Sandy on CFO.com

 

Their conference presentation made me note the following good idea. In the future, as well as the usual “Bill To” address, get your purchasing department to record “Made In” and “Shipped From” data as part of the purchasing process. Use this in your risk management system and factor this into the risk-based decisions on which suppliers to choose to minimize your overall risk of supply chain disruption. Having this wider information obviously makes good business sense – but also in times of crisis others may be relying on the robustness of your supply chain. A health care manufacturer of blood plasma products who also spoke at the conference springs to mind as an example.

 

In our personal lives we all know that those sexy hi-tech gadgets we crave that say “Designed in California” on the box, are more than likely “Made in China” and shipped via any number of ports around the world. When you think about the key items in your organization’s supply chain – raw materials, spare parts, essential ingredients – do you always have the “Made In” and “Shipped From” data to factor into your risk assessments and mitigation strategies? Having the breadth of information to create risk mitigation strategies which balance local suppliers (who are likely to face the same crisis conditions as yourself), distant suppliers (who are unlikely to bet hit when you are but could face different issues at different times) and to hold appropriate stock levels in a variety of locations, makes sense – but is impossible without access to the full supply chain data.

 

In a crisis other businesses may be relying on you and your supply chain. What can you do to reduce supply chain risks, improve resilience and bring your supply chain back up as soon as possible after any disruption? The first step is to identify and analyze the risks.

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(2) Responses to “Hurricane Sandy – Two Supply Chain Risk Management questions to remember”

  1. Heather Coleman says:

    On the topic of extreme weather and climate-related events on corporate value chains, a good resource to check out is a new report called “Value Chain Climate Resilience: A guide to managing climate impacts in companies and communities”: http://www.oxfamamerica.org/publications/prep-value-chain-climate-resilience. The report was released by a group of companies across sectors who are members of the Partnership for Resilience and Environmental Preparedness. The companies include: Starbucks, Green Mountain Coffee Roasters, Levi Strauss and Co., Entergy, Swiss Re, Calvert Investments, and Earth Networks.

    • Peter says:

      Thanks for bringing this report to our attention, Heather. It looks really helpful.
      I’m working my way through it now – the case studies look especially useful to bring supply/value chain resilience to life.

      I’m also interested in how applicable the points raised are to other potential disruptions – like natural disasters, economic failures, political unrest and terrorist activity. I’m guessing – VERY applicable?

      Peter