November 22
nd, 2012
An Agile Supply Chain to deal with Global
Challenges
Antonio Galvao
Vice President Global Supply Chain at Diversey, now part of Sealed Air Author of the "Working Green" department in APICS magazine since 2008.
More than 21 years of experience encompassing planning, logistics, sourcing, manufacturing, engineering, customer service, product portfolio management, and marketing operations.
Degree in production engineering and MBA from the Federal University of Rio de Janeiro in Brazil.
Brazilian (born and raised in Rio), lived in 5 different countries, married, 2 kids and a tortoise.
APICS Certification, Education and Membership
APICS certifications are the global standard of excellence
– APICS Certified in Production and Inventory Management (CPIM) – APICS Certified Supply Chain Professional (CSCP)
APICS education provides opportunities for every career level
– APICS offers online, on‐site, and self‐study options – International conferences and seminars
APICS membership connects you to a network of professionals and APICS partners in France and worldwide.
Agenda
What is supply chain risk and related terminology What are the most common supply chain risks? What strategies can mitigate these risks?
What is a resilient supply chain? Key take aways
What is risk?
Many definitions…
Possibility of something happening that impacts your objectives. Effect of uncertainty on objectives.
Risk = ƒ(Probability,Consequences)
But there is always uncertainty to assess P or C
Also linked to risk scenario, involving a source, likelihood and an impact. •What can happen and what is the cause?
•How likely is it to happen?
•If it does happen, what are the consequences?
Business continuity institute – Nov 2011
Survey results for 2011:
•85 percent of survey respondents experienced at least one disruption
•Adverse weather was the main cause of disruption, with unplanned IT and telecommunication outages in second place at 41 percent. Transport network disruption came next with 21 percent and earthquake and tsunami at the same level.
•Cyber attack rose to become a top three source of disruption in the financial services sector. •Only 8 percent of respondents could confirm that all of their key suppliers had business continuity programs in place to deal with disruption. Less than half of respondents check that these programs are likely to be effective in practice.
•The ability to demonstrate resilience is becoming a factor in purchasing decisions with 28 percent of respondents stating that they always or often have to provide assurance to prospective clients.
Supply Chain Global trends
Trend towards just-in-time and lean practices
Efficiency rather than effectiveness
Trend towards reducing costs
Globalization of supply chains, more complex and vulnerable
Trend towards economies of scale
Centralized distribution and manufacturing Lower costs but at the same time less flexibility
Trend towards outsourcing non-core business activities
Loss of control of the supply chain when it is most needed
Trend towards consolidation of suppliers (intentional and M&A)
Increased potential for supply failure
What is Supply Chain risk?
Supply Chain risk definition:
“Decisions and activities that have outcomes that could negatively affect
information or goods within a supply chain”1
Dimensions of risk:2
-Flow of goods and services -Security of internal information systems
-Flow of information -Risks with relationships forged among SC partners
-Flow of money -Corporate social responsibility
The list goes on and on : physical, informational, relational, innovative
1 Apics Dictionary 13th edition 2 Spekman & Davis (2004)
Supply Chain risk
Risk sources:
Consequences (impact) :of the risk sources Risk drivers : that turns risks into consequences Strategies: to address the risks
Husdal, J (2010)
Risk sources Risk drivers Impacts
Mitigative actions Contingency actions Proactive mitigative actions address risk sources Reactive contingent actions address risk consequences Bad weather Inadequate road maintenance Vehicle redesign Rescue services Late delivery
Supply Chain risk
Supply Chains are becoming more
vulnerable and increasingly at risk of
disruption.
Identifying sources of risks Environmental risk Christopher, M (2011) Supply risk Control risk Demand risk Process risk Internal Bankruptcy of supplier Quality problems Natural disasters Political instability Severe weather Order quantities policies Batch sizes SS policies Manufacturing bottlenecks Strikes Volatile demand “Bullwhip” effect Risk profile is directly and indirectly impacted by the strategic decisions taken.
Managing Supply Chain risk Christopher, M (2011) Understand the supply chain Improve the supply chain Identify the critical paths (nodes and links) Manage the critical paths Improve network visibility Establish a supply chain continuity team Work with suppliers and customers to improve supply chain risk management procedures
Strategies to mitigate risks Chopra and Sodhi (2004) Increase capacity Increase responsiveness Capability Pool or aggregate demand Increase flexibility Increase inventory Acquire redundant suppliers
Risk mitigation framework
Makharia, M, Plenert, G, Sambukumar, R APICS magazine 2012
Sandy readiness
Sandy readiness
Key takeaways
•Supply Chains are exposed to a wide range of risks that are distinctive for each and every supply chain.
•Disruptions can have severe consequences
•Supply chain risk management seeks to identify risks, assess their impact and then mitigate these risks
•Evaluate redundancy x efficiency trade offs and focus on collaboration are important strategies to mitigate risks
•Resilience is becoming a critical component in supply chain strategy and is already recognized as a major attribute for excellence in supply chain management
•Risk management might not be as appealing as other supply chain disciplines but neglecting it can be extremely costly
