I ran into a very interesting article from Bloomberg entitled How Toyota Steered Clear of the Chip Shortage Mess. Nearly all automakers announced that they would have to cut their production numbers due to a serious shortage of semiconductors. This was made even worse by a recent fire in a Japanese manufacturing plant. One might think Toyota would be seriously impacted by the general market situation and by one of their suppliers being temporarily unable to produce. Apparently, Toyota … [Read more...]
Have You Revised your Supply Chain Risk Analysis?
Last year, I wrote about the Business Continuity Plan (BCP). More and more companies request their suppliers to prepare a BCP, as a structured approach to performing a supply chain risk analysis to get prepared for the risks they are exposed to. If you haven’t revised your BCP in 2020 and 2021, you have probably been caught off guard by recent events. But the question everyone is wondering is, ‘can we even forecast what is going to happen?’ … [Read more...]
Supply Chain Risk Management, Part 5: Moving Manufacturing to Vietnam, Thailand, Malaysia, or India (Pros & Cons)
One of the main conclusions of many companies is as follows: 'diversifying our supply chain outside of China is a must in order to reduce risk'. There are two main reasons for this. First, the USA has been leading the charge against Beijing, and any change in the White House will not stop the current trend to "decouple" from China. The general public, the Congress, and the Senate all seem to agree that China is a "strategic competitor" and needs to be opposed. Second, some disasters can … [Read more...]
Supply Chain Risk Management, Part 4: How Much Inventory Do You Need?
If you make sure to sit on 6 months of inventory for every one of your major products, you will run much lower risks of being unable to supply your customers with what they need. You might even be able to cut a current manufacturer off and ramp up a new one, without any impact on your customers. There will be downsides, though. Working capital is expensive. Warehousing and transporting all these goods are not cheap. You may have to write off damaged, lost, of rapidly obsolete materials. (It … [Read more...]
Supply Chain Risk Management, Part 3: A Purchaser Supply Chain KPI Scorecard’s Benefits
Most purchasers pay too much attention to the price of what they buy but fail to take risks into account. That's a very widespread issue. One solution to this might be developing a supply chain KPI scorecard, to force buyers to report on how risky the supply chain they are building really is. After all, setting up a solid supply chain is an important objective isn't it? This is what we are going to cover here. … [Read more...]
Supply Chain Risk Management, Part 2: The Business Continuity Plan
In this post, let's focus on disaster recovery, and more specifically on the business continuity plan, with a simple example. We will also provide you with a free template. This is the second post in our series of Supply Chain Risk Management, which will come out gradually over the next few months. … [Read more...]
Supply Chain Risk Management, Part 1: What are VUCA and Black Swans?
We seem to be at a pretty low point right now: Billions of people are confined at home. Economists are predicting a disaster and seem to think 2020 will probably be worse than what most of us can remember. The behavior and effects of this novel coronavirus are still partly unknown. It could still mutate and become more dangerous, for example. And, most amazing of all: the situation has been changing dramatically every 1 or 2 weeks. I am starting this new series on supply chain … [Read more...]