APICS is the leading professional association for supply chain and operations management.
Think Supply Chain

Think Supply Chain

Leading the supply chain conversation

Join the supply chain conversation with Sharon Rice, executive director of the APICS Educational and Research (E&R) Foundation. Explore topics including the role of supply chain planning in corporate success, how sustainability and corporate social responsibility enable the bottom line, global supply chain risk management, and more. Comments are welcome. 


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Supply Chain Risk Maturity Leads to Performance Gains

by APICS staff | N/A 2013 | 13 | 16

A majority of companies give only marginal focus to risk reduction, according to a report by PwC and the MIT Forum for Supply Chain Innovation. The report, “Making the Right Risk Decisions to Strengthen Operations Performance,” based on a survey of 209 large, global organizations, examines the companies’ supply chain and risk management practices and their effects on resiliency and performance. For example, the study also reveals that 60 percent of companies surveyed experienced their key performance indicators dropping by 3 percent due to a supply chain disruption in the past year.

Key discoveries in the report include the observation that supply chain disruptions have significant effects on business performance and finances; that companies that invest in risk management, risk segmentation, and supply chain flexibility are more resilient to supply chain disruptions; and that companies with mature supply chain and risk management capabilities perform better in every surveyed operational and financial performance measurement.

The report’s authors conclude that supply chain risk management is beneficial to all parts of the business, including product design, product development, operations, and sales. Through a capability maturity model, it’s possible to benchmark a company’s ability to respond to risks and increase maturity to gain competitive advantage.

Auto Parts Suppliers Feeling the Squeeze 

As new car and truck sales reach a post-recession high and automakers seek to release new models, many parts suppliers are overwhelmed, the Detroit Free Press reports. Ford, for example, is boosting production at its North American facilities by investing in people, equipment, and processes, says Jim Tetreault, vice president of North American manufacturing, adding that his company increased line rates at nearly every factory.

While Federal Reserve Board data shows auto suppliers are operating at 79 percent capacity, about 25 percent of suppliers are nearing 100 percent, which leaves little margin for error. The power train and electronics sectors are experiencing the most shortages, especially for highly machined parts.
 
Some suppliers have the ability to press underused plants in other parts of the world to meet demand in North America, says Staci Kroon, president of Eaton Automotive. However, this increases transportation costs and disrupts automakers’ strict delivery requirements.

The majority of auto suppliers are making investments in people and plants as well as providing overtime to their employees, says Neil DeKoker, CEO of the Original Equipment Suppliers Association. Companies not investing risk losing business to competitors, he adds.

Many automakers have a different perspective. “We need suppliers to cooperate to maximize production opportunity,” says Bill Krueger, a purchasing and manufacturing manager at Nissan Americas.

Speculative Development at a Major Distribution Hub

In the Inland Empire, the region of Southern California located about 40 miles east of Los Angeles, new logistics and distribution facilities are under construction, many of them without tenants, the Wall Street Journal reports. This type of building is known as speculative development, which was common before the economic downturn but fell out of favor as a high-risk strategy often requiring large loans. Now, spurred on by the desert region’s proximity to busy ports and highways, developers are hoping the facilities will pay off, aided by the relatively low cost to construct distribution centers as opposed to office buildings and consumer malls.

About 75 percent of all goods imported through the ports of Los Angeles and Long Beach are handled in the Inland Empire. Yet more than 68 percent of the 13.8 million square feet of warehouse space currently under construction there is speculative. The earliest speculative developments there began in 2011, as a surplus of 36 million square feet of distribution space in 2008 slowly became absorbed.

Vacancy rates have dropped to 5.4 percent this year from a high of 9 percent in 2009. The area’s high degree of access and low rental rates are attracting many major companies, including Home Depot, Samsung, BMW, and Best Buy.

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August 27, 2013
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Watch more APICS webinars on demand.

 

Upcoming APICS conferences

Learn more about APICS conferences.

APICS 2013
September 29–October 1, 2013 | Orlando, Florida, USA

Upcoming APICS seminars and workshops

Learn more about the APICS seminars.

Supply Chain Risk Management Seminar Orlando: Identify, Assess, Mitigate, and Manage Risk
Friday, September 27, 2013 | 9:00 a.m.-5:00 p.m. ET

APICS Strategic Sourcing Seminar, in partnership with the APICS San Diego Chapter
Wednesday, November 6, 2013 | 9:00 a.m.-5:00 p.m. PST | San Diego, California, USA

 

APICS folios are now a FREE benefit for APICS members

FREE – APICS member
$19.95 - nonmember

APICS folios provide a go-to resource on a variety of industry topics and trends. Grounded in research to keep supply chain and operations management professionals ahead of the game, APICS folios cut through the clutter and bring you best practices, how-to steps, and practical advice that give you and your organization a competitive advantage. APICS members now have free access to APICS folios as an added benefit to your APICS membership. 

Current APICS folios  


Visit apics.org/folios to download yours today.  

Supply chain professionals: Take the APICS CSCP Learning System Free Demo today
By earning the APICS Certified Supply Chain Professional (CSCP) designation, you will demonstrate significant commitment to your profession and your career, distinguish yourself as an industry expert, and excel with your newly acquired specialized knowledge.



APICS CPIM exam study options
APICS offers a variety of study options to help candidates prepare for the APICS Certified in Production and Inventory Management (CPIM) exams and enables them to choose the option that matches their preferred learning method.

Instructor-led courses
For students who learn best in a classroom-based environment, there are instructor-led courses.
Find courses at your local APICS chapter or find an APICS partner outside North America to find courses in your area.

Online certification review courses
Online courses are ideal for professionals who enjoy taking a structured class, but need more flexibility.

Other APICS self-study options
APICS offers a wide variety of tools for candidates interested in studying on their own, including the
  • APICS CPIM Exam Content Manual
  • APICS CPIM practice questions
  • APICS CPIM study notes.

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