Preparing for Risk…Are You Ready?

I had the pleasure of listening to Rudy Giuliani speak at JDA FOCUS last week. He is a very interesting man, which is no real surprise, as he has so many life experiences to reflect upon – criminal lawyer, mayor of New York City, presidential candidate, and of course, having to deal with the chaos surrounding September 11th. 

He spoke on leadership and the key characteristics that make for successful leaders. One of his key characteristics for a successful leader was that they plan for risk. He learned this trait from one of his mentors early in his life who was a judge. Mayor Giuliani had many examples of how he planned for risk. When he was a lawyer, he would prepare four hours for every one hour of court time. When he was the mayor of New York City, he and his leadership team would prepare for every conceivable type of terrorist attack on the city. Now did they prepare for planes to be flown into the Trade Center towers? No, but their level of preparation helped them to quickly adapt to the situation and revise accordingly.  

As I tried to relate his ideas to dealing with risks in the supply chain, my mind became filled with many examples of how the supply chain leaders that utilize our JDA solutions plan for risk. Some are fairly straightforward, such as adding back-up generators for distribution centers, and acquiring alternative methods of data communication if network pipe goes down.  

But there are other opportunities to mitigate risk that are not as obvious and offer great opportunities across the broad supply chain industry. One of these is the migration of business applications to the cloud. More and more companies are embracing the cloud and its ability to provide application uptime, scalability and consistent performance. I know what you’re thinking… “Yeah, I get it. This is for when natural disasters occur like tornados.” That is true, but have you ever experienced a system meltdown during your busy holiday season due to a spike in Internet order volume? The cloud can help you mitigate this risk as well.  

Another opportunity is the creation of a supply chain control tower. By this I mean that you design predefined, alternative processes within your operation that can be used if and when your current processes cannot be properly executed. Let’s review a few examples: How will your company redesign its use of plants and current inventory when an earthquake knocks out one of your production facilities in Taiwan? Also, how quickly can you revise your transportation network if there are massive floods blocking roads in the U.S. Midwest, or if one of your key carriers goes out of business?  

Lastly, and possibly the most critical, is how to plan for risk when a product recall occurs. There has been an uptick in activity on this topic due in part to recent Food Safety legislation and the imminent start of ePedigree controls in the pharmaceutical sectors. I am proud to have been associated with a number of companies that have shown true leadership in protecting their brand and ensuring they provide safe products for their customers. For instance, one company has been doing mock recall tests with our applications for more than 10 years! They started this practice well before the days when product safety became a mainstream discussion. Unfortunately many companies still lack the controls they need to be compliant. You can tell from the television news announcements how prepared a company is for a recall based on the information they can share. Some companies have to recall EVERYTHING as they do not know where the tainted goods have been shipped. Other announcements are more focused and can state the specific lot codes, retailers and cities/states that were involved. The leaders for these companies have properly planned for risk.

What do you think? What is your company doing to plan for risk in your Supply Chain?

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