Supply Chain Horror Stories Part I

January 30, 2020

We all learn from our mistakes. But it's always better to learn from the mistakes of others. The following short supply chain stories each have something to help the Supply Chain Manager.

Lesson 1: Priorities differ – a disaster for one business can be a success for another.

One of the most pressing decisions supply chain managers face daily is how much inventory to order? It’s a “goldilocks” sort of target: Not too much….but not too little…but just right. In other words, managers try to avoid spending too much without creating a shortage of inventory in case things get tight. Most companies have different priorities at different times. Take, for example, the time a famous hotel brand created a champagne disaster during new year celebrations. Likewise, when a restaurant runs out of the main ingredients that constitute its flagship offering. Customers either “go with the flow” or go…to competitors. 

 

The big no-no for supply chain managers is running out of inventory-particularly brand connected items. Having a solid awareness of current inventory, anticipated needs, and cash flow requires constant monitoring. This concern is particularly true when seasonality or special occasions come into play. 

Lesson 2: Final-mile delivery is a challenge, even for the professionals.

With the growth of e-commerce brought about the rapid expansion of last-mile delivery services. But the growth of e-commerce exceeded the ability for the last mile companies to deliver the unexpected quantities during the Christmas season and left piles of ordered and paid-for goods at the docks of countless e-commerce warehouses. Sadly, it wasn’t the delivery companies that suffered the bad rap (and canceled orders); rather, it was the e-commerce vendors. 

So, just as keeping close tabs on cash flow, supply chain managers need to stay aware of their last-mile delivery partner's capacity to deliver.

Missing Piece in Supply Chain MetaExperts

Lesson 3: Just one part missing in thousands can cripple a project.

In today’s global supply chain, unexpected things can happen. For example, Boeing Aircraft outsources thousands of components to various companies around the world. Simultaneously, Typhoons in Asia and labor strikes disrupted the production of key parts and forced Boeing to revise its aircraft delivery schedule. During the disruption, Boeing had to not only layoff employees but also had to pay late-delivery fees that cost in the millions of dollars.

Even the most sophisticated companies can get hurt by unexpected events that can impact the delivery of key parts and components. So, identifying potential risks-particularly regarding key components- is another challenge for the supply chain manager.

Lesson 4: Work with customs officials to ensure a smooth passage.

International supply chain logistics often need to clear customs in different countries with different laws and taxation requirements. Given that human beings are involved in the process, it is not surprising that disruptions in paperwork and tempers can delay clearing Customs. 

Government employees carrying clipboards and quoting the local laws and regulations can become problematic, particularly if local company representation crosses swords with customs agents. Indeed, in some countries, making things difficult for customs officials can become very costly and have a long-lasting impact on a company’s ability to move their goods.

Add this concern to the growing list of things supply chain managers need to be aware of. Moreover, US laws specifically outlaw any “commissions” or “gifting” that suggests bribery (RICO laws) that many competing countries don’t require of their corporations. 

Lesson 5: Ask the command team what they need, don’t guess

The supply chain requires coordination and tracking all along the line. Today, there are many types of digital technology and applications that allow for instantaneous communications and document sharing. However, many of these tools are not compatible. Also, for the most effective use, users need to be trained properly on how to use the devices. The supply chain is also very dependent on the documentation that flows along with the movement of goods. This “paper trail” is very important for any supply chain problems and is the cause of most delivery disputes and resolution. However, blockchain may greatly help resolve this problem by creating encrypted digital documentation traveling at the speed of light.

Most supply chain managers are not technology experts but need to understand the communication and documentation flow that supports the supply chain. Indeed, the IT experts need to be in on the decision of what type of systems should be used and standardized between partners.

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