It was not too long ago when many in our community were often frustrated by the lack of recognition by senior management of the impacts and positive effects that global supply chain capabilities can have on business results. Were supply chain functional teams merely overhead cost centers? Many sought out academic studies that directly tied business or stockholder performance results to developments in supply chain.
Not so any more!
If you have been watching the various financial and traditional news networks these past days, you may have noticed all of the CEO, Wall Street analyst and reporter interviews comment on whether the devastating earthquake in Japan will have an impact on the particular company, industry, or least we mention, an Apple product like the iPad2.
This week I was viewing Bloomberg News and noted and interview with Timothy L. Main, the CEO of global contract manufacturer Jabil Circuits. The scrolling sub-title on the bottom of the screen was “Supply Chain Impact.” Mr. Main’s message was that it is still too early to assess overall supply chain impacts, and it might take weeks to know the real impact. Wisely stated, and no doubt Mr. Main was briefed by his supply chain planning and procurement teams. Similarly, the CEO and Chairman of General Motors and others have come forward to provide statements regarding the current state of supply chain impact.
IBM published an insightful Chief Supply Chain Officer study that was conducted a couple of years ago. Of the five concerns identified by the most senior supply chain managers, the number two concern was the elevated sense of risk provided by extended supply chains. It is a safe bet that if that survey were conducted today, risk would likely be the number one concern. Of more interest, however, was an observation brought out by the supporting questions, which uncovered a disconnect between Chief Financial Officers, the majority of whom (in excess of 60 percent) stated their company has a risk mitigation plan in place, verus the senior supply chain manager, who stated the opposite, that risk was an ongoing concern.
Today’s hyper-intensive world of Wall Street instant trades and hedging can brutalize any company’s stock with the hint of bad news, especially that related to a company’s supply chain. It is therefore no surprise that CEOs and CFOs are speaking out about the status of their supply chains in the wake of the Japan crisis.
In the coming weeks, we will all discover what the real impacts turn out to be, and how companies and supply chain teams rise to and overcome the challenges that will occur. Thus far, the impacts are clearly pointing to be patterns of component shortages in lowest tiers of industry supply chain such as semiconductor, high tech, automotive and other others. In the end, robust planning, supply chain analytics, responsive sourcing and strong ties with component engineering will likely be important differentiators in the weeks to come.
While it was not to long ago that supply chain recognition may have been taken for granted, another global in-process case study is now underway, which will once again etch that supply chains, and their planning and execution capabilities, absolutely do matter for business results. Japan and its people will eventually get through this crisis. Supply chain and procurement teams will rise to the ongoing challenges.
In the end, we will all discover the importance of investing in supply chain people, process and technology capabilities.