APICS is the premier professional association for supply chain management.

Supply Chain Risk in an Unstable World

by APICS CEO Abe Eshkenazi, CSCP, CPA, CAE |   2013 | 0 | 0
General Motors had to temporarily close its plant in Egypt during the demonstrations and violence surrounding President Morsi’s removal from power this summer. But what about the small businesses, which lack the redundancy and massive capacity of the large multinationals? Hands down, this is my favorite newsletter to write each year. On Monday, instead of meeting with APICS staff members, I had the opportunity to discuss this week’s article with a dynamic group of attendees at APICS 2013 in Orlando, Florida.

What follows is a direct result of the conversations we had in narrowing down the field from three interesting stories to today’s topic. I’m just sorry I can’t include each participant’s name in the byline.

While the other two articles discussed in the session each had interesting facets—you can find them at the links below if you’d like to read them yourself—one article was the group’s clear favorite. “How Companies Can Survive in a Crisis Zone,” posted on the BBC News website, discusses the problems businesses face in unstable regions that experience a lot of turmoil.

As Katie Hope writes, General Motors (GM) had to temporarily close its plant in Egypt, which employs more than 14,000 people, during the demonstrations and violence surrounding President Morsi’s removal from power this summer. Fortunately for GM, a large, multinational corporation can easily absorb this loss in capacity and compensate by increasing production elsewhere in its global network.

What about the small businesses, which lack the redundancy and massive capacity of the large multinationals? Emile Khoury, owner of a Virgin Megastore franchise in Beirut, Lebanon, estimates he has had to close down his shop at least 100 times during the past eight years because of the ongoing instability in the region. “It’s very difficult. We’re constantly in crisis mode,” he says. The strategies he employs to survive include delaying payments to suppliers, reducing operating expenses, and negotiating lower rents with landlords. “We’ve reduced to a skeleton staff, reduced working hours, and reduced inventory.”

For small businesses operating in crisis zones, Patrick Lord, managing director for global risk consultancy Control Risks in the Middle East, says the answer lies in planning. He advises leaders to understand their businesses on national, regional, and local levels; perform scenario planning; determine the likelihood of risks; and stay informed and be prepared for quick changes. “Unless you have that planning formula right from the start, then you are leaving yourself open to last-minute panic,” he says.

Supply chain crisis management

You don’t have to live in a crisis zone to understand the effects that supply disruptions of all kinds can have on your business. However, risk management is not just about reacting in an emergency. It requires a thorough understanding of your extended supply chain, no matter the size of your business.

Perhaps you have developed a robust understanding of your tier-one suppliers and the potential risks they might encounter. You might even have elaborate plans in place in case disaster strikes. But, can you say the same about your tier-two suppliers? What about large enterprises with even more complex supply networks?

Navigating supply chain risk management is not an easy task, but many tools and techniques are currently being developed. Many attendees at APICS 2013 saw firsthand some of these cutting-edge developments in risk-themed educational sessions.

APICS is devoted to providing supply chain and operations management professionals the tools and skills to become more adept at supply chain risk management. The APICS Risk Management certificate is a way to demonstrate to your employer that you have earned the core competencies to effectively manage, mitigate, and plan for risk at your organization. Additionally, the APICS Certified in Production and Inventory Management (CPIM) and Certified Supply Chain Professional (CSCP) programs contain robust risk information that is frequently updated to contain the most current information regarding this emerging field.

There are many opportunities year-round to earn your APICS Risk Management certificate. Visit apics.org/risk to learn more.

Finally, you might notice something different about today’s newsletter. Today, we are pleased to reveal that, along with the new APICS branding, this newsletter is now called APICS Supply Chain Management Now. I hope you’ll continue to join us as we explore the dynamic supply chain landscape and how it features in today’s news.
How far out do you evaluate risk in your supply chain? What tools or technologies do you use to help examine risk?
And who holds the responsibility for risk in your organization? What should the role of the supply chain professional be in risk management?
  • Skewed Results
    By Dave Turbide, CFPIM, CIRM, CSCP, CMfgE
    July/August 2013, APICS magazine

All comments will be published pending approval. Read the APICS Comment Policy.


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