Confessions of a Corporate Shopaholic

Gluing myself to the TV news seems like all I’ve been doing in every waking moment at home this week.  The daily developments are painful to watch, and it just appears as if the worst is always yet to come.  At work, we all are beginning to reflect upon how this epic disaster will have its effect toward our companies and commodities.  Business continuity plans need to be in-effect.  What about our staff, suppliers, partners, stakeholders, and customers in the zone of terror?  How will the utility crisis brought by the Fukushima Daiichi nuclear power plant turn out for the rest of the world?  Regardless of which line of work you are in, believe me, you will be affected. 

Jason Busch from Spend Matters has the following to say in how procurement and supply chain practitioners should be prepared for in this latest crisis.

“Spend Matters suggests an earthquake/tsunami procurement, commodity management and supply chain action plan based on the following steps for companies anywhere in the world in the following industries: automotive, diversified manufacturing (including transportation equipment and electrical machinery), aerospace and defense, high technology, consumer products, chemical/process. A plan should include at least the following steps:

• Fully understand your extended supply chain and supplier locations and facilities — two, three or even four levels down
• Stay in constant communication with your suppliers and send resources, if possible, to monitor production ramp-up at key facilities. Lessons from supply chain history suggest that what suppliers might be telling you on the phone in situations like this might be very different from reality. Those buying organizations who are on-the-ground first working closely with their suppliers are likely to receive more favorable treatment in capacity-constrained situations
• Understand the geographic concentration of suppliers in potential regions in the area (and potential geographic concentration from a port standpoint as well). Even in a multi-source arrangement, natural disasters can help cancel out most of the insurance a split-of-business sourcing strategy provides when geographic concentration exists
• Offer to help purchase raw materials and lower tier parts/components if necessary on a demand aggregation basis (your purchasing power as a larger organization may help secure supply given the constraints created by the disaster); provide resources to support the sourcing of materials necessary to get supplier facilities back up to production levels and understand, on a bill of material level, the raw material specifications that comprise a finished part, component, SKU or product (i.e., what your suppliers must buy)
• Monitor the situation (and your supply chains) in neighboring countries as well as those throughout the Pacific that may be impacted by the disaster
• Prepare to rely heavily on airfreight in the coming weeks and offer to step in and help suppliers from a logistics standpoint — despite the high costs, those who can rapidly secure sufficient capacity and favorable terms with airfreight working closely with carriers directly or indirectly through their 3PL partners are likely to face less; move quickly in general and consider charter situations based on industry, volume and the degree of impact
• Put friendships and relationships with supplier personnel first — factories can be rebuilt, facilities can be overhauled, ports can be brought back online. Human lives and the spirit of connection are temporal. We must all remember that relationships need to come first — not the bottom line.”

I cannot agree more to the last advice, ever.