The global business community should be aware that the impact on supply chain operations worldwide - from the two massive explosions that occurred Aug. 12 at the Ruihai International Logistics warehouse in Tianjin, China - will be far worse than suggested by news analysts and Chinese officials, says Resilinc CEO Bindiya Vakil.
A third (35 percent) of businesses in the manufacturing industry are extremely concerned about potential supply chain disruption, according to research released by BSI, the business standards company and the Business Continuity Institute (BCI).
Analyst Insight: There is now a false sense of security in supply chain risk management. Sixty-eight percent of companies believe they are better prepared than five years ago, yet supply chains experience an average of three material disruptions a year, according to Supply Chain Insights. Supply chain preparedness is for standard risk factors, such as financial viability, natural disasters, product quality, globalization and outsourcing. But, what about other risks and the security of supply chain? – Mickey North Rizza, VP Strategic Services, BravoSolution
Chronic disruption, a pervasive phenomenon referring to a persistent disruption that degrades but does not inhibit supply chain function and that does not respond to traditional remedies, affects manufacturing most, according to an APICs Supply Chain Council survey.
Outside risks can stretch supply chains' capabilities to the breaking point, but executives who run them often fail to develop risk contingency plans, according to a new study from the Global Supply Chain Institute at the University of Tennessee, Knoxville.
As manufacturers seek to source quality goods at the lowest cost, supply chains that were once confined to a single country or continent have stretched around the world. Managers have become adept at addressing recurrent risks—frequent, low-impact incidents such as demand fluctuations or supply delays that affect efficiency. However, they have devoted less energy to designing supply chains that prevent or mitigate the impact of disruptive risks such as labor strikes, political unrest, regulatory shifts, and natural disasters. These events can have severe and lasting repercussions on operations, so manufacturers would do well to devise strategies that alleviate this risk.
Whereas business interruption insurance covers lost profits and continuing expenses as a result of physical damage to a policyholder's own facilities, contingent business interruption insurance covers such losses stemming from damage to the premises of a supplier or customer. Large companies typically have both types of insurance as part of their property insurance policies; smaller companies may not have the contingent business interruption extension.
An oil and gas company is installing a solution to locate personnel in the event of an emergency at its construction site in Newfoundland, Canada, using radio frequency identification technology provided by systems integrator Focus FS. The system consists of active RFID tags, readers, exciters and software from GuardRFID Solutions.