Tuesday, June 06, 2006

Supply Chains in the GME

From the FT.. Mastering Risk - Coping with complexity and chaos:
"Achieving supply chain resilience
Because even the best-managed supply chains will hit unexpected turbulence or be affected by events that are impossible to forecast, it is critical that resilience be built into them. Resilience implies the ability of a system to return to its original or desired state after being disturbed. Resilient processes are flexible and agile and are able to change quickly. Supply chain resilience also requires at those critical points that can be adversely affected by changes in the rate of flow.Supply chain resilience depends on rapid access to information about changed conditions. Through collaborative working with partners, this information can be converted into supply chain intelligence. Because networks have become more complex, they will rapidly descend into chaos unless they can be connected through shared information and knowledge. The aim is to create a supply chain community where there is a greater visibility of upstream and downstream risk and a shared commitment to mitigate and manage those risks.Ultimately, it may be necessary for companies to re-engineer their supply chains not, as in the past, with cost minimisation in mind but to maximise their flexibility and agility. Today's changed conditions are forcing companies to question past decisions on sourcing, outsourcing and the pursuit of Clean solutions. Responsiveness and resilience must be the twin goals of supply chain design and management."

In the rush to cut costs, the risks are often overlooked. In the GME, risk management has to be an essential part of logistic excellence. It has to be faster AND better. Better means safer.

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