Managing supply chain disruptions
By Staff -- Modern Materials Handling, 1/1/2005
The shipment was scheduled to arrive yesterday. But word was just received that it will be delayed until the day after tomorrow. That's not such an uncommon supply chain disruption. And as a result, companies are having to find ways to cope with blips in deliveries and shipments.
"The good news is that leaders are discovering how to reduce their supplier-related liability by changing the way they measure and control their suppliers, and by rethinking the way they identify and resolve supply disruptions internally." That's according to a recently released report from the supply chain research firm the Aberdeen Group, "Supplier Performance Management: What Leaders do Differently."
To say the least, disruptions deserve that kind of attention. The report says disruptions are costly, often resulting in six- and seven-figure expenses (see chart).
Some of the techniques being used include inserting control points at suppliers to minimize mistakes. Leaders are also using cross-functional business goals to resolve last-minute supply disruptions. In addition, predictive analytics are being used to create forward-looking risk management instruments.
And the payoff exceeds the added expenses avoided. "Companies that adopt best-in-class supplier performance management practices are two to three times as likely to achieve supplier on-time delivery and first-time fill rates that are above the average," says the report.
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