There's no question that supply chains are becoming more complex, says Richard Douglass, industry director of manufacturing with IBM. Volatility, he says, "has become systemic across the supply chain." No longer can disruptions be dealt with on an individual, ad hoc basis. Another key issue, he says, is visibility - which, according to a recent IBM survey of chief supply chain officers, is largely inadequate. "You can't manage risk ... without visibility to the entire process," Douglass says.
IBM sponsored a study with the University of Maryland on the subject of "de-risking" the supply chain. It focused on such best practices as the creation within companies of risk-management boards that can engage in scenario planning and network optimization. Their efforts help to determine where assets should be placed, in order to minimize the vulnerability of a company's supply chain to any number of potential disruptions. Proper inventory optimization is another key to minimizing risk, Douglass says, with companies scrutinizing how much raw materials and finished goods they should be placing with critical suppliers and distributors. Essential to that effort is the ability to "adjust on the fly."
Automation is a critical element of any effective risk-management plan today. It can be applied to such key processes as load tendering and consolidation, and the determination of optimal routes for the movement of freight. Unfortunately, says Douglass, "A lot of companies on the transportation side still manage to a fair degree with manual [processes] and spreadsheets."
Stephen Dean, senior vice president of sales and marketing with Ryder, says that Lean inventory and manufacturing strategies aren't necessarily a path to greater risk. Lean, he says, is all about "predictability, error-proofing and standardized processes." It can help companies to offset the disadvantage of longer supply lines, while minimizing reliance on buffer stock.
