Supply Chain Council examines emergency response

Top business leaders speaking at the Supply Chain Council’s Executive Summit last week agreed on one key point: preparation is everything.

In today’s globally connected economy, organizations must respond quickly to market changes while mitigating exposure and risk, said Gary Kilponen, SCC’s event chair.

“Supply chains have had to become more responsive to economic fluctuations as well as environmental and political disruptions in a variety of ways,” he noted.

Joining him it that observation was James B. Steele, program director Value Chain Risk Management, Global Business Operations for Cisco Systems, Inc. He witnessed first hand the devastating earthquake and tsunami that hit Japan last March, and helped lead the recovery mission that could have crippled Cisco and its suppliers.

“The scale, scope, and rapid evolution of the Japan crisis was unprecedented and was a key test of the preparedness and resiliency of operations across many industries,” said Steele.

Having acquired so many smaller companies leading up the disaster, added to the complexity of the response, Steele added, but said Cisco’s “actuarial approach” to assessing risk paid off in the end.

“We could see that our supply chain could be easily fragmented if we did not take a holistic view of our operations,” he said. “As a consequence we developed a simulation program that prepared us for catastrophe.”

But even the best analytic engine cant’ anticipate everything, he allowed, noting that a predictive model can at best provide “agnostic resiliency.”

“This means building resiliency in both design and engineering,” said Steele. “Anticipating the challenge of incident management and downstream impact was very difficult, but we went to war when this happened, and took a non-negotiable attitude when it came to rebuilding our supply chains.

Joining him in the “war room,” was Cisco’s Board Chairman and CEO, John Chambers, who played a vital role in reestablishing linkage with top tier suppliers throughout Japan.

“With more than 250 key suppliers – many single sources – we opened the check book to keep from letting any of them go under,” said Steele. “Having centralized accountability gave us a clear mandate for this kind of dramatic action.”

And while the incidence response was successful, there is no real substitute for having a “play book” and transparency throughout the value chain

SC
MR