After the Japan-based earthquake and tsunami of March, 2011, the Gartner Supply Chain Research team published a short guide for managing through large-scale supply chain disruptions. As the impacts of Hurricane Sandy have become clearer for supply chains operating on the East Coast of the United States, we are seeing that those same recommendations are well-suited for companies dealing with this current crisis.
Most large companies have some form of disaster recovery and business continuity plans in place to address major supply chain disruptions. These disruptions may be the result of internal or trading-partner-specific failures or, in the case of the recent crisis from Hurricane Sandy, a significant natural disaster. What differentiates leading companies is the quality of the crisis plans and their ability to execute them with agility; no two crises are the same, and creative thinking in real time is critical to success. Leading companies also have a mature risk-monitoring function that enables them to sense and respond to issues as early as possible, thus minimizing the impact on end customers.
All that said, as a company in the middle of a crisis, you are faced with pressing questions on what to do now, regardless of your level of plans already in place. Managing through a crisis is a bit like operating in a “fog of war” in terms of the levels of ambiguity and misinformation involved. Putting in place some fundamental operating practices can help you and your company meet your objectives sooner and more efficiently.
As such, we’ve collected research to help you manage through a supply chain crisis situation by focusing on the following five areas:
- The ability to make empowered decisions quickly and with transparency
- Sales and operations planning (S&OP) process to elevate visibility on current crisis issues and the resulting trade-offs to senior management
- Scenario planning to assess potential future risk impacts and contingency plans
- Strong lines of communication with customers, suppliers and employees
- Agile logistics to work around chokepoints caused by the disaster
In the following research piece, we provide details on these five areas, as well as links to existing research with even more findings, analysis and recommendations:
In general, we see that companies running more mature supply chains, have the ability to quickly visualize the impact of regional disturbances in terms of supplier locations, the types and volumes of materials and services they provide and the financial impact of disruptions to those upstream sources on finished products and specific customers expecting delivery of impacted products in the near term. This information can be used to set priorities for which suppliers to contact and coordinate recovery with first and which customers to support first and/or contact to share recovery plans.
Even more important that the development of analytics-based sense and response systems, is the human aspect of these types of disasters. Putting the health and safety of your employees and those at customers and suppliers as the foremost concern in both corporate communication and action is not only the right thing to do, but a natural way to strengthen these relationships. And on that note, we wish a speedy recovery to all those impacted by the storm and its after-effects!
Category: Advisory BCM Process Event Technology Tags: BCM, BCP, Business Continuity Management, Business Continuity Planning, Business Operations, Continuity of Operations, COOP, Emergency Management, Emergency Preparedness, French Caldwell, Gartner, Hurricane Sandy, Jay Heiser, Operational Risk, Operational Risk Management, Roberta Witty, Sandy, Stan Aronow, Supply Chain Recovery, Supply Chain Risk, Supply Chain Risk Management