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Supply Chain Disruptions (SCD) Part I – Introduction

Courtesy of Laurel Rafferty

“The danger in turbulent times is not the turbulence but acting on yesterdays’ logic”, Peter Drucker

What is today’s logic for acting on supply chain disruptions?

The news is saturated with supply chain disruption stories, even the New Yorker has covered it, multiple times, in different ways—in words in a story, “The Supply Chain Mystery”, and in pictures, not a reality-based photo, but in its cover drawing. The cover, displaying the magazine’s infamous wit, had “that ultimate expert on shipping logistics, Santa Claus,” coming to the supply chain disruption rescue, pulling a container ship to shore, a cover christened “Ever Giving”, a play on words on what Santa is and perhaps not an uncalculated reminder of the Ever Given, the ship that got stuck on the Suez, that Santa might have rescued were he around out of season.

The stories range in their SCD coverage

- from where it comes from

- to its staying power

- to how to cope

The biggest issue is the uncertainty about it.

What drives it?

Who should do what?

What should individuals do?

What should companies relying on supply chains do?

What should the public sector do?

Who are the experts?

Does technology have a key role?

What are the big implications we need to--and it is time to--confront?

The biggest certain message for everyone—individuals. companies, and government—is that they can and should prepare for supply chain disruptions. This is not yesterday’s logic, but eternal logic.

This story will take a stab at this, beginning with Part I and what companies relying on supply chains should do.

The Harvard Business Review (HBR) take:

This article has a practical and straight-forward message:

Companies should map their supply chains, lest they repeat the mistakes of the past: being unprepared when a disaster happens.

The mapping should be done in depth.

Cost issues are a focus: “Companies need to be aware that the resources for network mapping are expensive but worth it: the value of having the map in place is greater than the cost and time to develop it.”

It covers important recent developments that can ease the mapping task: service companies that now exist and that can help in data acquisition and analysis as well as create user-friendly results.

It addresses what companies should do to ensure its internal staff – from procurement, logistics, and supply-chain financing -- works together on what needs to be fixed -- tools, information, people, processes and the like.

It highlights supplier selection and evaluation methods as a key component of the needed fix, pointing out the need for: disruption-related metrics in supplier evaluation, required supplier participation annually in supply chain mapping, and including these and other disruption-related matters in supplier contract terms.

The Yossi Sheffi take:

Sheffi covers the subject, not in articles but books, in a number of books, two of which I comment on here:

In Chapter 4, entitled Finding the Agility to Defeat Fragility, Sheffi covers, e.g.:

What companies did in response the pandemic-based disruption, i.e.: They changed their work methods to help both in fighting the pandemic and staying in business.

Changes fell in three categories of agility

Scale agility: Making more to meet demand

Asset agility: Finding uses for their underutilized assets to provide products or services closely related to the company’s preexisting business {e.g., masks meeting the “gold standard” of protective equipment)

Scope agility: pivoting their production to brand new types of products (repurposing existing factories to produce sanitizers).

For example, in Chapter 6—and in other sections--he covers proactive preparations, especially the central steps of creating redundancy and building flexibility. He also speaks of the maturing of risk management, leading companies to prepare other types of specialized risk-management resources, such as business continuity plans, emergency operations centers, and codified processes for managing disruptions.

Hands down, Sheffi steals the show: From these two works I could see the extraordinary range and depth of Sheffi’s knowledge. This knowledge is based on primary research, the resources he commands, including the MIT Center for Transportation and Logistics, familiarity with company executives, whom he interviews, and specialists he draws upon from a business, Working Knowledge—two of its staff, in particular, who, in his words, were “instrumental in helping develop the concepts, as well contributing to the research and ensuring that the results were presented in readable English.” Sheffi is also adept at articulating and publicizing his work in media interviews, thereby increasing awareness of all things SCD-related.

See below for a Supplement to this Introduction

This supplement covers other sources that have written on supply chain disruption and related issues.

Other sources that have written on supply chain disruption and related issues: Paul Krugman, WonkingOut: Who Knew Used Cars and Shipping Containers Would Matter So Much? Aug. 13, 2021 Paul Krugman, Honey, Who Shrunk the World? Paul Krugman, Wonking Out: What Vaccine Supply Tells Us About International Trade John Williamson, Senior Fellow, Institute for International Economics, The Washington Consensus as Policy Prescription for Development John Maynard Keynes, The General Theory of Employment, Interest and Money David Hummels, Transportation Costs and International Trade in the Second Era of Globalization, JOURNAL OF ECONOMIC PERSPECTIVES VOL. 21, NO. 3, SUMMER 2007 (pp. 131-154) Chad Bowen and Thomas J. Bollyky, How COVID-19 vaccine supply chains emerged in the midst of a pandemic, Working Paper r21-12 August 2021 Katie Rogers and Brad Plumer, Biden Administration Moves to Fix Supply Chain Bottlenecks, June 8. 2021 Jeanna Smialek and Madeleine Ngo, New York Times, August 23, 2021, What an Adult Tricycle Says about the World’s Bottleneck Problems Peter S, Goodman and Niraj Chokshi, How the World Ran Out of Everything, June 6, 2021, updated August 30, 2021 Peter S. Goodman and Keith Bradsher, The World Is Still Short of Everything. Get Used to It, August 30, 2021 Susan Helper and Evan Soltas, Why the Pandemic Has Disrupted Supply Chains, June 17, 2021

Of the many articles I’ve reviewed on supply chain disruptions, see list in above, two stand out in my opinion:

  • How the World Ran Out of Everything – with another news article, The World Is Still Short of Everything. Get Used to It, providing an update

  • Why the Pandemic Has Disrupted Supply Chains, a White House report

The first takes you through the making of a business philosophy that took over, the Just-In-Time transformation, calling for precisely timed goods movement which would thereby eliminate the need for warehouse storage, resulting in radically reduced costs, but embedded the seeds of its destruction in not hedging its bets to address the inherent risks of such strategy, known

and discussed by experts, but ignored, painfully experienced today, exacerbated by the pandemic.

The update takes you through how we have all learned a lesson in the ripple effects of supply chain disruption … and has more emphasis on port and shipping-related matters, showing how shipping is at the center of what has gone wrong in the world economy, calling the disruption The Great Supply Chain Disruption, and saying it is at the heart of the haunting exceptional level of ongoing uncertainty impacting the world’s economic future.

The second explains what the U.S. government is doing about it.

Other installments of my SCD coverage will include:

Examples of Some of Sheffi’s Most Quotable Quotes & Salient Points

---Some Salient Points will provide a sample taken from the first three chapters of his book, The Power of Resistance. The focus of these is to foster understanding of how to prepare for supply chain disruptions. The sample provides a very detailed example of how one company responded to a mega disruption – GM’s response to the 2011 quake and tsunami in Japan.

Footnote to Supply Chain Mystery Link

[1] " … severe weather events are a reminder that the pandemic supply-chain ruptures may pale compared with those which will be associated with the climate crisis in coming years. Indeed, one of the most urgent tasks now may be to think about the two issues together. In both cases, the scramble for quick fixes—clearing downed power lines, restocking pasta—can distract from the need for systemic change. The real challenge, when it comes to thinking about supply chains, isn’t making sure that a container ship is unloaded. It’s deciding how we want to live” (New Yorker Magazine 10/24/2021, The Supply Chain Mystery by Amy Davidson Sorkin. p. 5. This is a view not found in many, if any, news articles on supply chain disruptions.

About the author of this introductory piece:

Laurel E. Rafferty

P o r t s c a p e

Laurel Rafferty has specialized expertise in port/maritime and freight transportation system strategic planning. Her experience in this area of specialization, many years in duration, has been divided between public and private sector work and is international in scope. She is founding principal of Portscape. The firm has a strong research component, which complements its work in planning and strategy development. This research has led to a shift in the firm’s emphasis from sustainability to the resilience of transport systems.


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