Three Tips For Your Next Supply Chain Crisis

Samsung's recent Galaxy Note battery fiasco—in the aftermath of the huge Takata airbag and Volkswagen emissions scandals—really highlights the one thing that no company should ever do when confronted by earth-shaking bad news: don't panic!

Samsung jumped the gun on its initial response, blaming one battery supplier. After a costly recall to get the supposedly faulty batteries out of consumer hands with good intentions of protecting their safety, they discovered that batteries from the other supplier had the same problem. Here are three tips for companies facing a tough supply chain recall.

· Accept the Inevitability of “Normal Accidents”: Alas, in a complex supply chain, good intentions do not guarantee good outcomes. “Normal accidents” are inevitable in a complex system made up of many interdependent parts. It doesn't matter how hard everyone tries, sooner or later something unexpected will happen that will spread rapidly because of the interdependency of the parts. Aviation safety and healthcare professionals have incorporated this thinking into their accident prevention practices, and supply chain managers should too.

· Collaborate with Authorities: Samsung launched its initial product recall without consulting with the Consumer Product Safety Commission. The authorities have all the experience and tools to deal with a product safety issue, so why would you turn down that resource? Law usually requires cooperating with authorities for major issues not just so the government can protect citizens, but also so the government can help to protect the company. Failure to coordinate with authorities means that you take on all the risk if your response fails.

· Be Transparent: The public can be amazingly tolerant of mistakes and crises, but has zero tolerance for companies that get caught withholding information. Remember Toyota and the faulty accelerator crisis, or the current Volkswagen diesel emissions scandal? Assume that any information withheld from the public, well-intentioned or not, will be interpreted in the worst light. Best to be as transparent as possible!

When your company is going through a supply chain crisis, it is critical not to panic. Panic sparks rash decisions which usually aren't fully thought through. We see from the examples of Volkswagen and Samsung that their hasty decisions lead to larger problems and a lack of trust from their consumers. Utilizing these three tips, your company can confidently face a tough supply chain crisis.

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