- THE MAGAZINE
When Chesley “Sully” Sullenberger took off from New York’s LaGuardia Airport and landed in the Hudson River over six minutes later, technically speaking, his flight was a failure. However, we recall it as a success because his skilled response managed to keep every person aboard alive. He demonstrated just how much of a difference the right approach to dealing with contingency can make.
Those of us in the logistics industry can surely relate; we have the potential to experience any number of disruptive events in the course of our jobs. Like Sullenberger, we cannot always control how, when or where these contingencies will happen. However, we can mitigate their effects on our supply chains, provided we are willing to employ risk management practices, tools and techniques.
Many people assume Sullenberger was able to do what he did because he had more than 40 years of flying experience. While experience cannot be discounted, in reality all commercial pilots spend countless hours learning how to address a wide variety of in-flight mishaps just like the one he faced — all with the help of highly detailed, step-by-step protocols.
Companies must adopt a similarly “be prepared” approach to contingency planning, first by investing the necessary resources to create a detailed plan and second by making sure that plan is ready to deploy at a moment’s notice.
Among other things, this plan must:
Anticipate the main kinds of events that might impact your particular operations.
Acknowledge the specific risks associated with each different event, because just as “every unhappy family is unhappy in its own way,” every contingency your company faces has the potential to disrupt your supply chain in very unique ways.
Action — Include a clear set of actions for dealing with each event, making clear distinctions between critical paths whenever necessary.
Communicate the plan to all key stakeholders, ensuring everyone is on the same page about who is authorized to begin implementing it and under what circumstances
Revisit the plan constantly to be sure all elements and strategies continue to be up-to-date — or that they continue to be the best options
Rehearse — Periodically test or rehearse (even if only partially) to ensure all components of the plan are still viable.
If unsure about where a company should begin crafting such plans, consider enlisting the help of logistics engineering personnel. Through tools like simulation and predictive modeling, they can help determine with painstaking accuracy many of a supply chain’s weak spots — and whether or not certain proposed solutions will actually help correct them.
Regardless of how clear weather conditions seem at the start of a flight, commercial pilots are not permitted to leave the ground in a plane that does not have working instruments, because often these tools are more valuable for “seeing” what is really happening than the naked eye — and far more helpful if conditions get rough.
Supply chain visibility tools and practices are equally important for companies, especially when it comes to risk management and mitigation.
Some of these tools enable foresight and the ability to address disruptive events long before they escalate into full-fledged problems. For example, by monitoring key production milestones against vendors’ confirmed Purchase Orders, it is often possible to spot orders that will not be ready to ship, even before they roll off the production line.
By engaging in more sophisticated scorecarding and other key performance indicator monitoring activities, companies can identify and resolve supply chain performance areas needing improvement or declining, which creates lapses if they continue on current trajectories.
Other versions of these visibility tools are equally useful because they offer a real-time panoramic view of its inventory pipeline. This can include how much inventory is flowing through your supply chain, the location of that inventory, and the status of that inventory — in production, in transit at rest, or transitioning from one mode or carrier to another.
Thus when an issue occurs, or threatens to occur, companies can make more fully informed transportation, inventory and product allocation decisions.
The more of both types of visibility available — and the more accessible they are via a single platform — the easier it will be to choose and implement the best diversion or mitigation strategies.
Commercial pilots never fly alone. Instead, they are assisted by co-pilots, various systems and instruments and a team of highly knowledgeable and qualified air traffic controllers who are, in turn, assisted by their own state-of-the-art technologies and teams. As a result, when things go wrong, they do not have to determine the best course of action by themselves.
Optimization tools — particularly the latest generation of tools — can fulfill many of these same support and advisory functions.
Often used in the past to help support a plethora of best-case-scenario decisions (ranging from site selection to route planning), these tools now are capable of instantly updating and creating newly optimized plans at any time in the life of a shipment — including when some large or small event changes everything. Just as important, they are able to do so nearly immediately, based on several simultaneous shipping criteria. Those criteria might include: ensuring cargo arrives at its final destination on its preferred date, maximizing transit space and load utilization, making real-time, in-transit redirections of freight, and minimizing door-to-door costs.
As a result, if inclement weather, a glitch in production, a carrier delay or other event threatens to disrupt the smooth flow of a product or raw material deliveries, companies no longer have to choose between taking its lumps in the form of a disruption and settling for a sub-optimized solution that took days or weeks to develop.
Routine Back Ups
The average aircraft is full of back-up systems and navigational alternatives, and during preflight, pilots thoroughly check them all.
A company would do well to equip itself with similar back-ups for its key supply chain operations, at least in its contingency plans. Such suggestions might include a satellite warehouse in a market where one does not have a presence, an alternate carrier, a different mode or mix of modes (such as air-sea or sea-air), an alternative port, a different supplier, or a supplier based closer to the end market rather than at a great distance.
Just as important, companies should take the opportunity to put those back-ups to the test before, rather than when, needed. So, if one has factored deconsolidation or a different distribution center into contingency plans, consider sending a few loads a week through that alternate channel. Or, if planning to use a different source for certain raw materials, perhaps now would be a good time to begin purchasing a small portion of supplies from that source.
Not only will this help ascertain whether or not the proposed channel will work as well as predicted, it will help build a friendly working relationship with the players in that channel, making things easier if the contingency plan requires implementation.
This is important when a widespread disruption has other shippers competing for space in that channel at the same time. The fact that a company has already given those channels business may mean the channel will be more inclined to serve said company than those other shippers.
Lessons Learned Perspective
We have all heard of the “black boxes,” the in-flight recording devices that were often the only means of determining what occurred before, during and after an airline accident. Officials have often used these boxes not just to determine the root cause, but also identify other factors that contributed to an accident. The goal is to apply what they learn to the development of safer airplanes, procedures and training protocols in the future. Current technology now being examined includes real-time streaming of flight data.
In a similar vein, companies can and should use every resource possible to identify and analyze real-life, supply chain incidents — including actual incidents and near-misses. This includes incidents internally experienced as well as well-publicized setbacks other companies have had. At the very least, these experiences can provide more realistic suggestions for the kinds of logistical challenges a company might face in the future, supplying the framework for better-informed contingency planning and helping to be better prepared for the unfortunate surprises that come down the line. At best, they will enable one to shore up every day supply chain operations to help protect them as much as possible.
“As much as possible” is the operative term. As supply chains continue to get longer and involve more players, countries, modes and handoffs, it exposes more potential volatilities. That does not mean such volatility is inevitable. It does mean it is more possible — regardless of whether or not that fact is acknowledged.
The choice is yours. Do you want to be prepared? Or do you prefer to wing it?
Frentzel is vice president, global contract logistics, of APL Logistics.