If often takes a crisis like this to get an organization to look at their strategies. As unforeseen as the coming of an earthquake is, we know they do happen which presents a choice to companies in their supply-chain strategies.
As Willy Shih explains, “"In the race to provide better quality at lower prices, manufacturers picked very narrow, optimized supply chains.""They put all of their eggs with one supplier that had the best product at the lowest price."
Organizations can opt to consider the tortoise and the hare fable where priority is given to approaches that value the longer-term, as opposed to the short-term. Not only does this protect against unexpected crisis which damage supply-chains, keeping the wheels of the business productively turning, but it also adds in a way to the company’s strategy toward sustainability. Is there a cost to this? Of course, and it is recovered over time in ways that are often not measured although the benefit is there.
Crisis are a peculiar thing in how groups prepare for them. The article says, “When a natural disaster hits, relief organizations such as the Red Cross and Doctors Without Borders swing into action with crisis-response plans that have been honed, refined, and improved with experience. Not so manufacturers and their complex webs of suppliers, who in many cases lack that same experience or large-scale backup plans. The result: a chaotic scramble resulting in production delays, product shortages, and higher prices.”
I had worked for a multi-national company in the past and we had gone through the steps in developing a crisis response plan for the chance that a nearby facility might release harmful emissions. The crisis never took place for my time with the organization, but the plan was put in place and people felt secure knowing that should it happen, they would be safe. For all the effort, resources, and consideration put into designing the most efficient manufacturing facilities and systems we can, it should be a natural next step to protect them by developing crisis response plans. In terms of ROI for the initiative and the associated cost, if it is looked at as being amortized over a long period of time, which is consistent with the likelihood of an earthquake happening, for most geographic regions, the cost to the business is minimal. It’s a matter of risk management and taking steps to prevent the chance of unexpected losses. If people need help in selling this idea to their organizations, they can present the case as a matter of cost avoidance or loss (risk) management. Benchmarking to other organizations is always helpful, where you will find some companies have an entire department dedicated to loss control.
Frank Riganelli, Author
Former Fortune management, consultant, and trainer.
P.S. — People have questioned my posting at this group for the fact that I write mainly fiction novels. I explain to them that the hypothetical thriller novel which has a character scramble for their life when a disaster hits their workplace is that much more realistic when the group’s actions and responses are true to life. And then I tell them that I also write books on the topic of business.
As Willy Shih explains, “"In the race to provide better quality at lower prices, manufacturers picked very narrow, optimized supply chains.""They put all of their eggs with one supplier that had the best product at the lowest price."
Organizations can opt to consider the tortoise and the hare fable where priority is given to approaches that value the longer-term, as opposed to the short-term. Not only does this protect against unexpected crisis which damage supply-chains, keeping the wheels of the business productively turning, but it also adds in a way to the company’s strategy toward sustainability. Is there a cost to this? Of course, and it is recovered over time in ways that are often not measured although the benefit is there.
Crisis are a peculiar thing in how groups prepare for them. The article says, “When a natural disaster hits, relief organizations such as the Red Cross and Doctors Without Borders swing into action with crisis-response plans that have been honed, refined, and improved with experience. Not so manufacturers and their complex webs of suppliers, who in many cases lack that same experience or large-scale backup plans. The result: a chaotic scramble resulting in production delays, product shortages, and higher prices.”
I had worked for a multi-national company in the past and we had gone through the steps in developing a crisis response plan for the chance that a nearby facility might release harmful emissions. The crisis never took place for my time with the organization, but the plan was put in place and people felt secure knowing that should it happen, they would be safe. For all the effort, resources, and consideration put into designing the most efficient manufacturing facilities and systems we can, it should be a natural next step to protect them by developing crisis response plans. In terms of ROI for the initiative and the associated cost, if it is looked at as being amortized over a long period of time, which is consistent with the likelihood of an earthquake happening, for most geographic regions, the cost to the business is minimal. It’s a matter of risk management and taking steps to prevent the chance of unexpected losses. If people need help in selling this idea to their organizations, they can present the case as a matter of cost avoidance or loss (risk) management. Benchmarking to other organizations is always helpful, where you will find some companies have an entire department dedicated to loss control.
Frank Riganelli, Author
Former Fortune management, consultant, and trainer.
P.S. — People have questioned my posting at this group for the fact that I write mainly fiction novels. I explain to them that the hypothetical thriller novel which has a character scramble for their life when a disaster hits their workplace is that much more realistic when the group’s actions and responses are true to life. And then I tell them that I also write books on the topic of business.
No comments:
Post a Comment