• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • 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
    • 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
    • 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
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • BLOG
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » El Niño: A Test of Supply-Chain Resilience

El Niño: A Test of Supply-Chain Resilience

Teal_Opinion_265a19.gif
September 25, 2015
Bindiya Vakil, Founder and CEO, Resilinc

A strong El Niño is coming. Weather experts say there's a high probability that this winter will be marked by heavy rainfall in some parts of the world, and drought conditions in others. Either way, global supply chains will be severely impacted.

The effects will be felt at every stage. Critical raw materials, especially agricultural products, will become scarce or difficult to obtain. (Drought in the Midwest, for example, tends to reduce supplies of sugar, palm oil and guar gum, while heavy rains can cause tight markets in phosphate and potassium-based materials.) Manufacturing operations will be disrupted by shortages of electricity due to drought, or rendered inaccessible by flooding. Transportation routes will be slowed or blocked by high waters.

Floods in Thailand, drought in other parts of Southeast Asia and the more recent flooding from Severe Tropical Storm Etau in Japan - likely the first significant manifestation of this year’s El Niño - have served to teach companies a lesson about the need to be prepared for severe weather conditions.

Most serious supply-chain disruptions come as a surprise. No one could have predicted the precise timing of the earthquake and tsunami that struck Japan in 2011, let alone the chemical explosion that shut down China’s Port of Tianjin and the surrounding area only weeks ago.

El Niño, by contrast, comes with plenty of warning from meteorologists. There’s no excuse for companies to be caught without a solid plan for responding to the condition - even if they can’t be sure of the exact nature and location of its impact.

The winter of 2015-2016 presents companies with a chance to test their underlying philosophy of supply-chain resilience and leadership. Ask yourself this key question: Are you sufficiently motivated to start taking precautionary risk-management measures today? Or do you possess a “diving-catch” mentality, whereby you try desperately to save the day when disaster strikes?

Now is the time to begin your proactive risk assessment, to identify key suppliers in potential flood zones, or raw materials that might be impacted by drought conditions. In addition, you need to be initiating and pursuing a variety of risk-treatment options, such as re-locating inventory, updating supplier records as part of your business continuity plan, qualifying alternative sources of supply, and possibly investing in contingent business-interruption insurance.

An Action Plan Checklist

Here are a few specific steps that companies should be taking in anticipation of El Niño:

Get to know your suppliers. Examine your full array of suppliers worldwide. Then identify those areas that are likely to be affected by El Niño conditions, and build up inventories of corresponding raw materials, components and finished goods from those sources.

Identify alternative sources of supply. Companies that rely on sole suppliers for key products are in a position of high risk. Sometimes that arrangement is unavoidable; more often it can be supplemented by another supplier located in a different geography. (Having multiple suppliers in the same area doesn’t provide much protection against catastrophic events such as the Japan earthquake.) It’s far more effective to engage alternative suppliers early than to beg for product in a crisis, when you have no prior relationship with the desired source.

Be prepared to make changes on the fly. Manufacturing operations are likely to require temporary modifications in location, production methods and technology utilized within the plant. Often companies find themselves scrambling in an emergency to reposition facilities in line with available raw materials, personnel and transportation links.

Establish alternative supply routes. Even under so-called normal conditions, space on ships, planes and trucks can be difficult to obtain during peak shipping seasons. Book additional space in advance, to avoid being hit with delayed deliveries or sky-high prices for emergency capacity, such as air or express freight.

Resilinc’s Report

Resilinc has published an impact-analysis brief entitled “El Niño: A Test of CPO Leadership and Your Supply Chain Resiliency Culture.” It provides a primer on El Niño from a supply-chain perspective, and tells companies what to expect for the 2015-2016 season. It concludes with a checklist and action plan that chief procurement officers (CPOs) can use to assess the state of their resiliency efforts.

The message is clear: for CPOs who have failed to prioritize supply chain risk-management capabilities for their organizations, the coming months will prove challenging. For those who have prepared, global supply-chain disruptions will be seen not as threats, but as opportunities to gain competitive advantage.

This year’s El Niño will serve as a test of your risk-management and resiliency leadership and culture. If you get blindsided by this event, you’ll have no one but yourselves to blame.

Source: Resilinc

RELATED CONTENT

RELATED VIDEOS

Technology Supply Chain Visibility Business Strategy Alignment Global Supply Chain Management Quality & Metrics SC Security & Risk Mgmt
KEYWORDS Bindiya Vakil business continuity plan Business Strategy Alignment disaster recovery Founder and CEO Global Supply Chain Management Quality & Metrics Resilinc risk-treatment options SC Security & Risk Mgmt SCRM Supply Chain Analysis & Consulting supply chain disruption Supply Chain Management: Supply Chain security and Risk Management Supply Chain Risk Management Supply Chain Visibility Technology
  • Related Articles

    Supply Chain Disruptions and Risk Still Looming: How to Create a More Resilient Supply Chain

    Moving Towards a Resilient Supply Chain

    Importance of Resilient Supply Chains Can't Be Overstated

  • Related Events

    Why IBP May Save Your Supply Chain & How to Run It By This Spring

Bindiya Vakil, Founder and CEO, Resilinc

El Niño: A Test of Supply-Chain Resilience

More from this author

Get regular updates!
Subscribe to our newsletter

Enjoy curated articles directly to your inbox.

Popular Stories

  • 1115_chinarareearthminerals

    Podcast | Can China’s Monopoly on Rare Earth Minerals Be Broken?

    Sourcing/Procurement/SRM
  • 1111_makeorbreakblockchain

    The Element That Can Make or Break Blockchain for the Supply Chain

    Technology
  • 1125_themodernfactory

    The ‘Modern’ Factory Remains a Dream for Many Manufacturers

    Technology
  • 1118_howconsumerproductscompanies

    How Consumer-Products Companies Are Wasting Their Digital Spend

    Technology
  • 1122_forcedlaborinindia

    Podcast | This Campaign Is Out to Stop Forced Labor in India

    Sourcing/Procurement/SRM

Digital Edition

55746

Subscribe today and receive the latest issue

Start Your Subscription

Case Studies

  • Manufacturer Slashes Shipping Costs With AI Packaging Solution

  • Apparel Retailer Saves $45 Million With Reverse Logistics Solution

  • QuestaWeb Configures Fragrance Company’s Complex Procedures Into Its Advanced FTZ Software

  • Business Turnaround: Integrated Business Planning as a Management Tool

  • How a 3PL Reduced Rejected Deliveries Using LoadProof

Visit Our Sponsors

  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • The Magazine
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • 100 Great Partners Form
  • Resources
    • Newsletters
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us

All content copyright © 2016 - 2018 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