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Reel in Risk with a Broader View of Supply Chain Flexibility

In an era when supply chain risks are soaring, senior managers are putting more of a premium on supply chain flexibility. But they now need to view the concept as more than just adjusting manufacturing supply to demand—a narrow perspective that can lead to problems. Here’s how managers can take a much broader view of supply chain flexibility, with risk reduction foremost in mind.

By ·

It has become a classic example of the effects of supply chain disruption: the time when fire destroyed the premises of a supplier that provided Nokia and Eriksson with critical components for mobile phones.

The two companies had entirely different responses to the event, resulting in a dramatic industry shift. Nokia was able to secure components quickly from other sources. By contrast, Eriksson struggled to respond. The disruption not only cost the company several hundred million dollars in lost sales; it essentially ended its position as a player in the growing wireless phone business. Poor business continuity planning by Eriksson, combined with a lack of supply chain flexibility, turned a hazard risk into a strategic risk.

As the search continues for new and improved ways to manage supply chain risk, senior managers will put more and more of a premium on operations that are as flexible as possible. The concept of flexibility is receiving increased attention in the popular press as well as from supply chain professionals. A global supply chain survey conducted by PwC and reported in Industry Week concluded that almost 65 percent of respondents plan to implement greater flexibility to better respond to supply chain challenges, making flexibility a top supply chain priority.

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It has become a classic example of the effects of supply chain disruption: the time when fire destroyed the premises of a supplier that provided Nokia and Eriksson with critical components for mobile phones.

The two companies had entirely different responses to the event, resulting in a dramatic industry shift. Nokia was able to secure components quickly from other sources. By contrast, Eriksson struggled to respond. The disruption not only cost the company several hundred million dollars in lost sales; it essentially ended its position as a player in the growing wireless phone business. Poor business continuity planning by Eriksson, combined with a lack of supply chain flexibility, turned a hazard risk into a strategic risk.

As the search continues for new and improved ways to manage supply chain risk, senior managers will put more and more of a premium on operations that are as flexible as possible. The concept of flexibility is receiving increased attention in the popular press as well as from supply chain professionals. A global supply chain survey conducted by PwC and reported in Industry Week concluded that almost 65 percent of respondents plan to implement greater flexibility to better respond to supply chain challenges, making flexibility a top supply chain priority.

SUBSCRIBERS: Click here to download PDF of the full article.

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Third Party Risk: Too Close for Comfort
You’ve got a handle on many of the potential supply chain "disrupters" that can paralyze your business. But the real risk is embedded in areas you may have overlooked.
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From the December 2017
This is a comprehensive guide to services, products and educational opportunities targeted specifically to supply chain professionals. As with years past, we’re also featuring several articles we trust will offer food for thought in your supply chain throughout the coming year.
Transportation Trends: The last mile, history repeating
Economic Outlook: A Complex and Uneven Scenario for Global Supply Chains
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