Supply Chain Disruptions

Supply Chain Disruptions are Too Easily Blamed on Outside Forces

Today, I experienced a work disruption – our IT network was down.  So I picked up John Manners-Bell’s new book on Supply Chain Risk.

One section that I found interesting was on the overlap of the Swiss Cheese Model, which had been developed by academics studying risk analysis, and supply chain management. The key idea is that the causal factors which can contribute to supply chain breakdowns can lay dormant for long periods of time before combining with other adverse factors and breaching the normal operating conditions.  The Swiss Cheese Model differentiates between active errors and dormant conditions.  Often a breakdown based on a dormant condition can only be called an error in retrospect. “ALL organizations have latent conditions – on their own they do not result in catastrophic failure.  However, what is required is an ‘active failure’ which, when these latent conditions align across a network or organization triggers a disastrous event.”  These ‘active failures’ are often human errors.

This was all kind of abstruse, until Mr. Manners-Bell provided an example that I think many supply chain professionals will relate to. Imagine that a carrier is one day late providing a key component to a factory and as a result the factory must shut down and millions of dollars of production is lost as a result. It would be easy to blame the carrier – or the driver.But what if the company was pursuing a lean manufacturing to reduce waste?  After all, this also reduces inventory levels and safety stock.

What if procurement went with low cost sourcing of a foreign supplier with long lead times? The long lead times increase the chance that something will go wrong along that long origin to destination route.

What if in qualifying the new supplier not enough effort went into quality management?  It might be easy to forget that an earlier shipment had been rejected when it failed the quality inspection. Clearly in this instance, management must take some ownership of the supply chain breakdown.

Just as I grudgingly must admit that I need to take ownership for any lost productivity due to the IT system being down.  IT sent me an email last night announcing the system would go down.  I just didn’t pay enough attention.