Crisis Management in the Times of Global Manufacturing Supply Chains
Guest Post by Varun Chhibber, Associate Consultant, MFG-ADT Online, Infosys
Crisis management has been the biggest bane for the manufacturers in the recent past. Manufacturing industry suffered from one crisis after another last year. First it was Japan earthquake and then Thailand floods.
The Japan Crisis caused major supply constraints for global automotive industry resulting in poor capacity utilization of plants, long waiting times, cancellation of orders etc. Similarly during the Thailand crisis many manufacturers were forced to shut down production or cut back the output due to disruption in supply of critical parts.
All this can lead to long term issues if timely action is not taken. This is why there is a need of better crisis management systems as it is otherwise difficult:
a) To gauge the impact of crisis
b) To come up with appropriate Strategy to counter the situation.
Gone are the days when all the production took place at one location. Today Gadgets, Automobiles etc. contain thousands of constituents procured from all over the world. Semiconductors may come from Korea, Metals from Asia/Africa, Electronic components from China/Japan, the list is endless.
Following figure shows what all Information is required by a manufacturer in a Crisis situation:
Business value: This is where we come into the picture. We can help our partners to come up with better systems and processes to gather all this information in a form which is comprehensible to Top management and aids them in making quick decisions about corrective actions to be taken.
With this invaluable information a Manufacturer can:
ü Be better prepared for crisis situations
ü Assess the impact of the crisis effectively
ü Adopt a strategy to mitigate the impact
ü Arrange for the same components from a different location which is not affected by the crisis thereby keeping the production smooth.
ü Inform all the stakeholders beforehand about the expected delays. Quick & timely Crisis communication is quite necessary for long term partnerships.
Hope we all learn lessons from the recent events which have shown us that it can take months to assess the full impact to a global manufacturing supply chain. When a manufacturer gauges too late, they have already lost critical time giving rises to a significant revenue & reputation risk.