• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Are You Ready for the Next Supply-Chain Disaster?

Are You Ready for the Next Supply-Chain Disaster?

June 11, 2012
Robert J. Bowman, SupplyChainBrain

The human toll was, of course, the greatest tragedy, but there were other ramifications as well. Turns out the Marl plant is responsible for about half the supplies of a resin that is essential to global auto part makers, and growing ever more critical to the industry. Today, plastics account for between 18 and 20 percent of a typical vehicle, versus just 2 percent in the 1960s, according to Grant Gilezan, environmental practice group leader in the law firm of Dykema Gossett PLLC.

"There's a rather small industry right now that is supplying the base material [of resins]," says Gilezan. In fact, Marl plays an even more vital role in global industrial production. Based in Germany's coal-rich Ruhr region, the city is host to the Marl Chemical Park, which produces 4,000 products for some 30 companies within a space of just 2.5 square miles.

It's unclear precisely how disruptive the Marl explosion will be to auto parts makers in the long term. "It threw industry for a loop," says Sheryl Toby, co-chair of Dykema's bankruptcy department. "The supply chain was knee-jerked into quite a crisis-management mode." But original equipment manufacturers and suppliers appear to have done a better job of managing the situation than in other recent disasters. Compared with the aftermath of last year's Japanese earthquake and tsunami, for example, OEMs were better informed about the location of key suppliers, could more quickly turn to alternative sources of raw materials, and had fewer communication problems throughout the chain.

Of course, the scale of the factory explosion didn't match that of the Japanese disaster, but the companies that were affected did seem to have learned some lessons from the recent past. "A significant number of natural disasters have hit very quickly together," says Toby, "and focused a lot of attention on things there were not typically at the forefront." Leading companies have put together response plans and crisis teams that can leap into action - in theory, at least - on a few hours' notice.

Toby says automakers have done a better job than many other industries in shoring up their operations against disaster. But even the most far-sighted manufacturers are still having trouble managing crises at the commodity level. "In general," she says, "it's much harder to get a real handle on raw-material impact and availability." In some cases, as in the steel industry, there might be no alternative source of supply. The only defense is better planning, well in advance of a problem.

So there's plenty of work to be done. Some of it needs to occur at the very start of a relationship between manufacturer and supplier. It's smart to spell out the basic steps that each might take with regard to allocating product in case of a sudden shortage. But Toby cautions companies against being too specific in contract language. "Detailed provisions can work against you," she says. "They could limit you to those [allocations]," even though common law might have dictated a better deal. (Odd to hear a lawyer caution against too much legalese, isn't it?)

Gilezan advises companies to build sustainability and environmental issues into their supply-chain planning processes. New U.S. Environmental Protection Agency rules on emissions standards for PVC plants and resins manufacturers promise to have a major impact on producers of key raw materials - more so than any natural disaster. Companies will have to find sustainable, non-hazardous chemical constituents with which to make resins. They have just three years to comply, and the price won't be cheap. Gilezan quotes estimates of $18m to $20m of capital investment, followed by $5m in annual operations and maintenance costs, per factory.

So on top of the call for greater visibility and communication across the supply chain, we have a need for additional spending on research and development, with an eye toward reducing the cost of complying with new emissions and product-content regulations. Gilezan says companies should be undertaking "strategic sustainability audits," to evaluate how far they must go in order to satisfy the new EPA rules. Often such efforts can be carried out under privilege. Some states have provisions that bar penalties for violations that are uncovered in the course of a company audit. "There are legal agreements that can protect the abilities of otherwise unrelated partners to interact without it being discoverable or subject to agency information requests," Gilezan says.

Don't leave it to your underlying raw-material providers to engage in such exercises alone. If you do, you're likely to encounter some uncomfortable surprises that have little to do with natural disasters - and will have a much more serious effect.

At the same time, companies should assume that the steady parade of unpredictable events will continue. In the first few months of 2012, we've seen earthquakes in Mexico and Indonesia, a tornado that affected a Boeing Co. plant in Kansas, a typhoon in Japan, and labor strikes in Spain and South Africa.

Economies might rise and fall, but there's never a slowdown of disasters that impact global business. All that matters in the end is a company's ability to respond quickly. As Toby puts it: "Those that move the fastest to gain visibility are going to win in the competition game."

Comment on This Article


Keywords: Supply Chain Security & Risk Mgmt, Legal, Govt. & Regulatory Issues, Supplier Relationship Management, Global Supply Chain Management, Supply Chain Analysis & Consulting, Environmental, Business Strategy Alignment, Automotive, Industrial Manufacturing, Chemicals & Energy, Logistics, Global Logistics, Inventory Planning & Optimization, Business Intelligence & Analytics, Business Process Management, Collaboration & Integration, EDI Communication (XML/EDI), Event Management, Forecasting & Demand Planning, Global Trade Management, Network Design, Sales & Operations Planning, Sourcing & Procurement Solutions, SC Finance & Revenue Mgmt., SC Planning & Optimization, Supply Chain Visibility, supply chain disruptions, supply chain risk management, Marl chemical plant, Evonik Industries, Dykema Gossett, raw materials supplies, natural disasters, earthquakes, tsunamis, chemicals, Germany factory fire, labor strikes, resins, automotive industry, US EPA, sustainability, supplier contracts

RELATED CONTENT

RELATED VIDEOS

Logistics Global Logistics Sales & Operations Planning Forecasting & Demand Planning Global Trade Management Supply Chain Finance & Revenue Management Inventory Planning/ Optimization Sourcing/Procurement/SRM Supply Chain Planning & Optimization Supply Chain Visibility Business Strategy Alignment Global Supply Chain Management Regulation & Compliance Supply Chain Security & Risk Mgmt Sustainability & Corporate Social Responsibility Automotive Chemicals & Energy Industrial Manufacturing
KEYWORDS Automotive automotive industry Business Intelligence & Analytics Business Process Management Business Strategy Alignment chemicals Chemicals & Energy Collaboration & Integration Dykema Gossett earthquakes EDI Communication (XML/EDI) Environmental Event Management Evonik Industries Forecasting & Demand Planning Germany factory fire Global Logistics Global Supply Chain Management Global Trade Management Govt. & Regulatory Issues Industrial Manufacturing Inventory Planning & Optimization Inventory Planning/ Optimization labor strikes Legal Logistics Marl chemical plant Natural Disasters Network Design raw materials supplies Regulation & Compliance resins Sales & Operations Planning SC Finance & Revenue Management SC Finance & Revenue Mgmt. SC Planning & Optimization SC Security & Risk Mgmt Sourcing & Procurement Solutions Sourcing/Procurement/SCM Supplier Contracts Supplier Relationship Management Supply Chain Analysis & Consulting supply chain disruptions Supply Chain Risk Management Supply Chain Security & Risk Mgmt Supply Chain Visibility sustainability tsunamis US EPA
Robert J. Bowman, SupplyChainBrain

Retail Consumer Data: The Key to Personalization, or Privacy Violation?

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • karen-jones.jpg

    Watch: Four Industry Disrupters Impacting Logistics

    Data Management (Big Data/IoT/Blockchain)
  • THE SPACE AROUND A COMPUTER KEYBOARD IS CLUSTERED WITH IMAGES GENERIC SHIPPING BOXES

    How Suppliers Can Overcome E-Commerce Supply Chain Challenges

    Data Management (Big Data/IoT/Blockchain)
  • A SEATED PERSON HOLDS A SMARTPHONE, SHOPPING

    Retail Consumer Data: The Key to Personalization, or Privacy Violation?

    Regulation & Compliance
  • TWO MEN IN SUITS ENGAGE IN CONVERSATION ACROSS A COFFEE TABLE HOLDING AN OPEN LAPTOPIN AN OFFICE

    For Shippers, Disruption Means Opportunity to Rethink Carrier Strategy

    LTL/Truckload Services
  • A BLUE AND WHITE JET BLUE PLANE FLIES ABOVE A YELLOW SPIRIT PLANE ON THE TARMAC OF AN AIRPORT

    Biden’s Antitrust Push Across Agencies Is Working to Block Deals

    Air Cargo

Digital Edition

Scb q1 2023 cover

2023 Supply Chain Management Resource Guide: Packing for a Difficult Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Holman Logistics Honeywell Intelligrated
IFM Infor Inmar
Keelvar Kinaxis Korber
Lean Solutions Group 2H Liberty SBF Locus Robotics
Logility LogistiVIEW Lucas Systems
MCA Connect MPO Nvidia
Old Dominion OpenText ORTEC
Overhaul Parsyl PMMI
QIMA Redwood Logistics Ryder E-commerce by Whiplash
Saddle Creek Logistics Schneider Dedicated Setlog Holding AG
Ship4WD Shipwell Shyft
Sourcemap Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing