This has been a very special week for us here in Norway, to say the least, where the unthinkable has happened, where Anders Behring Breivik, a lone extremist, not only single-handedly designed and detonated a bomb destroying major government buildings in downtown Oslo, but then also went on a shooting rampage at a Labor Party youth camp on Utoya Island, killing 77 people altogether, most of them teenagers. Serendipitously, as details now begin to emerge, logistical miscalculations and delays and disruptions to the delivery chain (i.e. traffic accidents, road closures and diversions, and wrong timing in how long it actually takes to get from A to B to C even in comparatively small-town Oslo) may have averted an even bigger tragedy. A prime example of how a Just-In-Time supply chain can go wrong.

 

The perpetrator also left behind what he called his Manifesto detailing the reasons for his attacks, including descriptions of people, companies and products whose knowledge and products helped him carry out his mission, by legally and thus unknowingly providing him with the supplies he needed. Many companies (and persons) and now shocked to find their names and products associated with Breivik, asking themselves whether they should have seen or suspected anything beforehand. In all cases the answer is no, as all bomb ingredients were acquired through legal channels, and while for example fertilizer was a main ingredient in building his home-made bomb, you cannot have the police ransack every farmer who buys fertilizer to make sure he actually disperses it on his fields.

 

Being named as used or useful by a terrorist is not a good thing. Potentially it could be damaging to your reputation, ultimately costing you sales or even putting you out of business. Even though the aforenotmentioned companies had no idea who they sold their goods to, many people will now perhaps think twice before buying from them. The companies themselves may feel compelled to enforce stricter rules and sales policies, thereby losing potential and actually harmless clients that otherwise would have been deemed legal but who are now deemed dubious.

 

In Breivik's case he also uploaded what some press have called Public Relations photos to his Facebook profile, which almost looks like a media kit, posing among other things in Lacoste sweaters and a Skins wetsuit, both brands highly praised by Breivik for their quality. I would imagine that Lacoste isn't exactly thrilled by this sort of PR and that sales in Norway will dwindle into nothing very soon. Who wants to wear a Lacoste sweater after this?

 

According to an article on the Norwegian business news website e24.no, citing Swedish resume.se, Arnaud Leblin, Communications Director at Lacoste, declined to comment on the issue, stating simply that "our thoughts are with the victims and their families". That said, every news photo showing Breivik wearing his Lacoste sweater will implant the brand in everybody's mind and undoubtedly hurt the brand value. The Swedish article also advises Lacoste to lay low and refrain from any marketing campaigns for the time being.

 

Logistics provider DB Schenker was also mentioned as being utterly unreliable when his delivery was delayed and where he infuriated turned up in person at their offices in order to complain. Admittedly, not the usual customer behavior, says Agneta Odhe, traffic manger at DB Schenker, according to Norwegian newspaper Dagbladet, but nothing you would alert the police to. In any case, not the best advertising for DB Schenker.

 

Not only does Breivik mention his favorite clothes brands, now perhaps forever tainted with the blood of his victims, he also mentions what type of car that is most unsuspicious for parking near bomb targets and what kitchen blender that proved itself to be most useful for mixing the bomb ingredients. Again, not the kind of marketing you may want your brand to have.

 

The lessons to be learned here are that bad things can happen to good brands (or good people, for that matter). While building a reputation takes time, it can be destroyed in no time, and rebuilding it can be very difficult, if not impossible. Are you prepared?

 

Have you ever had bad publicity happen to you? What did you do to counter it?

 

Recommended reading

Honey, G. (2009) A Short Guide to Reputation Risk. Farnham: Gower Publishing

Some of you may remember my posts on he Japanese earthquake and tsunami, where I asked the question Are natural disasters good for the economy? and a few  days latered countered by saying that Natural disasters are NOT good for the economy. Well, as it turns out, Japan is on its way to recovery, perhaps faster than many expected, indeed a sign of economical resilience, a topic I from time to time have covered on my other blog. As Michael Koply writes on softwareadvice.com, perhaps not the first place to look for such news, but nonetheless, "select Japanese manufactures have not only begun to rebuild, but emphatically rally back", he says.

Lean manufacturing – established as the gold standard by Toyota and other Japanese manufacturers – relies on the knowledge that processes and conditions will stay the same day after day. Harnessing this predictability and empirically analyzing results have allowed our global economy to become what it is today. Yet the very nature of our global economy makes “leaning out” difficult. Disasters can halt production for weeks. War and social struggle put business on the back burner. And the default on sovereign debts threatens to rip apart the supply chain one link at a time. However, fast-forward four months after the destruction of the March tsunami began, and select Japanese manufactures have not only begun to rebuild, but emphatically rally back. So, who are these all-stars, and how did they do it?

The article at softwareadvice.com paints an interesting picture of what has happened since the disaster and how the recovery has been made possible, linking to a wide range of online sources for documentation. For what it's worth, Japan's industry has learned and put into practice a number of valuable supply chain lessons:

The “secret sauce” of many supply chains is their connections, relationships, and deals with suppliers. Ironically, the Japanese Big 3 of Toyota, Honda, and Nissan were forced to share these secrets and work together to help assist the auto parts suppliers affected by the earthquake and tsunami. The result? Parts in high demand and short supply have been reduced from 500 to about 30 for Toyota, who is now operating at 90% of its normal capacity. Nissan is reportedly operating at near-normal production levels, while many Honda plants are ramping-up production to pre-earthquake production levels. Given the wide-scale havoc in Japan, these numbers could have been much worse without all three players’ cooperation. Plus, by developing these types of inroads now, Toyota, Honda, and Nissan are laying the foundation for future cooperation in the event of additional disasters.

Not only the automotive industry is doing much better than expected, Canon is another shining example:

Although it was initially expected to take the remainder of the year to recover, Canon is now at pre-disaster production levels. These results even surprised Canon. How did they do it? One of Canon’s overall strategies and focal points has been diversifying its parts production efforts, including focusing on plants in southern Japan and mainland China.

 

Apple is another manufacturer that seems to have found the right combination of investing in technology manufacturers and negotiating attractive supplier contracts to effectively mass produce its high-quality products:

Apple’s iPad 2 was announced only days before the earthquake and tsunami hit Japan. Many expected the disaster to greatly affect availability of Apple's newest tablet model. In reality, supplies for U.S. markets and other parts of the world were largely unaffected. Apple’s investment in its supply chain has made it seem almost impermeable to disaster.

What is not suprising, if do you look behind the scenes is that Fujitsu recovered faster than other semiconductor suppliers. How come?

Fujitsu was actually ready for a such a disaster before the earthquake. The company had developed an emergency response strategy after an earthquake rocked Iwate three years earlier. Fujitsu quickly weathered the storm by shifting front-end product manufacturing to unaffected plants in central Japan and back-end product manufacturing to southern Japan and China.

For the organizations that are willing to learn there are some great lessons to learn here, and one of my favorite articles - and perhaps the most practical - on how to mitigate supply chain disruptions is Christopher Tang's Robust strategies for mitigating supply chain disruptions, where he lists 9 ways a company can address supply chain disruption risk:

  • Postponement
    • Modular design allows switching to other components in case of supply shortage
  • Strategic stock
    • Planned stockpiling of regular demand at central locations to serve areas in need or shortage
  • Flexible supply base
    • If one supplier goes down, the other can take over, some for basic demand, some for high volume fluctuations
  • Make and buy
    • Always keep some production in-house, outsource basic items, make high-end items in-house
  • Economic supply incentives
    • Commit to buying certain quantities from a certain supplier to keep the (backup) business running
  • Flexible transportation
    • Muliti-modal, multi-carrier, multi-routes transportation, avoid chokepoints
  • Dynamic pricing and promotion
    • Sell what you have, don’t delay or promise to supply what you don’t have
  • Assortment planning
    • For retailers, displaying what’s in stock, influence customer choice and demand
  • Silent product rollover
    • Do not market the introduction of new products or the end of old products

That is exactly what the companies mentioned above have done, and that is perhaps why they have recovered so quickly.

 

Read more

softwareadvice.com: The Post-Tsunami Supply Chain All-Stars

 

Related links

husdal.com: How to measure economical resilience?

husdal.com: Nine ways of mitigating supply chain disruptions

With sustainable supply chains being the topic these days, it appears that food supply chains aren't a shining example of sustainable. supply chains. Did you know that 30% of all food in Italy is wasted? That is indeed a lot and I cannot think of any other supply chain where this much of what is produced isn't even consumed or used at all. Can you?

 

Not only are we wasting perfectly good food, we're also wasting resources by producing, processing and transporting food that is not going to be eaten in any case. What achievement is there, say, in a supermarket chain claiming to have reduced its (logistical) carbon footprint when much of what sits on its food shelves never makes it into anyone's stomach and is simply thrown away?

 

I remember how surprised I was when I was studying for my MSc in GIS in  the UK some 10 years ago and saw that the food in supermarkets had a  Sell-By date and a Best-Before date (in Norway we then and and now still  only have Best-Before dates). I soon learned that if I went to the  supermarket an hour or so before closing time, today's Sell-By food was  on sale at half price or less...a welcome money-saver for a poor  student.

 

I came across the food waste issue when zapping through my TV channels the other day, where food supply chains happened to be the main topic of that day's episode of Horizons, a BBC series that looks at what will be the greatest business challenges facing the planet over the next decade, who will solve them, and how?

Horizons will explore the soaring global population, which will have  increased 10% by the year 2020. It will visit areas where population  density influences crucial global issues such as safe living and food  supply. Horizons will address the need for better transport systems, and  it will examine how the need to reduce pollution is encouraging  innovators to reduce the carbon footprint our lifestyle creates. It will  look at food and land security, ranging from some of the world’s driest  places with inadequate water, to countries where rising sea levels  result in excessive water. In each programme Horizons will investigate a country that is not  only experiencing some of the problems highlighted by our experts, but  is also tackling those problems in novel and innovative ways that could  provide a model for other countries to follow.

Episode 10 of Horizons looked at food supply chains and takes place in Italy, home to good food and wine, but apparently also home to food waste. But some Italian companies are tackling this issue head on:

food-waste-bbc-horizons.jpg

bIt is quite disheartening to think how much food that is simply wasted without being used, but it is good to see thet there are simple solutions, and think this video really shows what how a sustainable supply chain extends from the first producer to the last consumer. Wasting less food is certainly a good thing to do, but shouldn't it perhaps be applied to other consumer goods as well? That is, only produce enough for consumption, not overproduce and then waste?

An interesting newspaper article caught my eyes yesterday, in "Dagens Næringsliv", the Norwegian equivalent to the Wall Street Journal. Asking 400 managers in major companies in all four countries, the article compared the top seven business risks, or rather: business fears, in Scandinavia, i.e. Denmark, Norway, Sweden and Finland. Interestingly, what is most on managers' minds is very different from country to country.

 

You would think that businesses, albeit they may be different in scope and geographical location, would have more or less the same fears when averaged out across the board, but that is definitively not the case here. Interestingly, supply chain risks do not rank very high. Actually, unless you count them in implicitly, they do not rank at all...almost.

 

But what do business leaders in Denmark, Norway, Sweden and Finland fear the most?

 

business-risks-scandinavia.jpg

In Norway, it is loss of key personnel, perhaps like it is described in this cartoon. The loss of key personnel does not seem to matter at all to leaders the other countries.This is difficult to explain. Perhaps it's harder to find qualified employees in Norway, thus making losing them a frightening scenario?

 

In Denmark it is disasters, terror attacks and political upheaval. In Sweden, same. In the other countries that raises very little concern. Obviously the drama that ensued in Denmark after the publication of the Mohammad cartoons plays a role here, and Sweden has had its share of assasinations and bomb scares, while Norway has peacefully escaped these calamities.

 

Note that Finland doesn't seem to fear much at all, but if anything, it would be loss of IT, electricity or or telecommunications. Maybe it's their "sisu" making its mark here?

 

Norway also ranks (presumably bad) media coverage as one of their major fears, along with an economical recession. While the latter also matters to business elsewhere, media coverage is only a concern to Norwegians. Is our press that bad?

 

Also noteworthy is that problems with partners or suppliers (implicitly: supply chain risks) are on some managers minds in Sweden and Denmark, but not in the other countries.

 

Well, the picture of what the biggest fears in business are, is muddled at best, at least as far as Scandinavia is concerned. And I hope that it is not the true picture. If all Norwegian managers are worried about is losing their key staff, then that makes me worried.

 

That said, what would be your biggest fear on the list above? Or are there other items on your agenda, as Bill Dubois asked in his post on What else could go wrong?

 

A link to the newspaper article (in Norwegian) with background information on the survey can be found in this post on husdal.com.

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