It doesn’t take much to remind us how small the world is. Within a matter of hours, you can travel from one side of the earth to the other. Distance is no longer the barrier it once was. We can think of global supply chains in much the same context. There is not one area of our lives that remains untouched (or unenriched) by supply networks.
For example, when you go to the grocery store to pick your favorite fresh fruit or send a text message regarding an important business meeting, you have a supply chain to thank.
When you go to a hockey game and watch the players speed around the rink or pick up medicine that makes you feel better when you are under the weather, it is the efficiency of the supply chain that makes that possible.
Like the sun rising in the east and setting in the west, we take the above for granted because our supply networks function at an incredible level of efficiency.
Even those of us in the supply chain profession can sometimes forget the intricacies and delicate if not tenuous points of connection that extend across the global landscape.
That is until something happens.
From tsunamis to earthquakes to erupting volcanos, there are a myriad of localized catastrophic events that can ripple through the supply chain, having far-reaching and often unanticipated consequences.
The Tohoku earthquake in 2011 caused many tragic deaths and had a $210 billion impact on Japan’s economy. The auto manufacturing industry took a direct aftershock. Parts shortages that originated on one side of the world shut down plants as far away as the United States.
Even a single lightning strike at the wrong place and the wrong time can reverberate for years after the initial incident.
One of the more famous cases of supply interruption, one that remains a reference for teaching organizations about the benefits of proper risk management, took place when lightning struck a Philips microchip plant in New Mexico. The resulting fire contaminated millions of mobile phone chips. Ericsson was directly affected, and a labor strike resulting from management inaction in the face of the shortage cost Ericsson more than “US $400 million in annual earnings,” and significant market share because they could not meet customer demand.
Coronavirus is a serious matter, and we are already beginning to see the threat to global supply chains.
A recent story reported that an auto manufacturing plant in Europe had to shut down because of the closing of supplier businesses in China to contain the spread of the virus.
Even professional hockey in North America is feeling the impact. There may be a shortage of hockey sticks because the Chinese manufacturer has been deemed non-essential and therefore closed down.
Ultimately, any interruption of supply chains for any reason raises concerns about global recession.
Considering the above examples reminds us how special the supply chain industry is. Even though we don’t always see the results of our efforts, our role in keeping all aspects of life running through supply chains makes a difference every day.
Sarah Barnes-Humphrey | Procurement Foundry