MIS2101 Section 702 – Amy Lavin – Spring 2014

Disaster Looms: Why Today’s Global Supply Chains Are At Risk

http://www.forbes.com/sites/robertbowman/2014/04/01/disaster-looms-why-todays-global-supply-chains-are-at-risk/

Companies today have to take a better look at their supply chain measurements to ensure the safety of their products and facilities, before the  end product is received by the consumer. It is unethical and irresponsible for companies to not have a proper risk-management plan in place when a faulty product is made and has caused harmed to a human being. Today, more and more companies are trying to cut costs and increase purchasing power by reducing suppliers to a bare minimum. This strategy that companies are using in an attempt to increase revenue can hurt a company if they were not to have access to an alternative vendor, if a disaster were to occur with a companies original supplier. “Companies have spent untold amounts of money on ERP systems to manage financials and other basic functions, but they’re less advanced in acquiring systems that enable end-to-end visibility and collaboration among all supply chain partners.” Companies can lose billions of dollars from a supply chain disaster and harm the reputation of a company, which can lead to a long-term decrease in revenue.

1. If you were the risk manager at a large company, would one of your main focuses for the company be on the  supply chain process? Why?

2. Do you think it is irresponsible and potentially harmful to a company in the long run to reduce their supply chain and to not have the proper safety measures in place for the factories. Why or why not?

3. What is an example of one company producing a faulty product and what was their immediate response to producing that faulty product? Did they have a proper supply chain risk management plan in place?

7 Responses to Disaster Looms: Why Today’s Global Supply Chains Are At Risk

  • Supply chain management would definitely be one of my main focuses because a problem in the supply chain could have catastrophic results for the company. GM and Toyota have proven that having the proper supply chain protocols and systems could lead to recalling millions of products sold. While a recall of this size did not shut down GM or Toyota, it could definitely cause a smaller company to go under. Having the proper protocols in place is a preventative measure that is tough to pitch to top executives, but could save the company in the long run.

    It is definitely irresponsible to reduce supply chain protocols and safety measures in order to increase the short term profits for investors. This may potentially lead to a major loss down the road that will hurt the company and the investors. Top executives should be thinking long term, not short term.

    Toyota had produced over one million cars that had faulty gas pedals and did not recall the products until years later. The proper protocols would have allowed Toyota to find out the problems much sooner and recall the products before most of the damage had occurred. A very good supply chain protocol may have even prevented the products from hitting the market.

  • 1. If you were the risk manager at a large company, would one of your main focuses for the company be on the supply chain process? Why? I would think it should be since there is greater risk when dealing with outside companies. I would want to ensure that there are good controls in place.

    2. Do you think it is irresponsible and potentially harmful to a company in the long run to reduce their supply chain and to not have the proper safety measures in place for the factories. Why or why not?
    I think it is because when your safety net drops and you lose focus that is when a disaster can occur.

    3. What is an example of one company producing a faulty product and what was their immediate response to producing that faulty product? Did they have a proper supply chain risk management plan in place?

    I can’t think of the exact toy but the toys that were found to have lead paint and needed to be recalled. I don’t think there was much risk mangagement in place because no one verified that the toys met US safety regulations.

  • Great article, Kyle!

  • 1. Yes. My company’s supply chain would be an essential part of the company. Subsequently, I would dedicate a substantial amount of my start-up capital to establish a supply chain that assist my company in doing business with my suppliers, vendors, customers, management, & employees.

    2. I believe it is irresponsible for any company (of any size), to not have proper safety measures in place for their employees. It shows that the company is more concern with the bottom line then with the health & welfare of their employees. The reduction of a company’s supply chain can be achieved in a way that does not have an effect on their employees. For example, in a manufacturing company only conduct business with reputable vendors and suppliers for the parts.

    3. I believe that they did. I purchased a GE mover the stove microwave. They were new on the market. During my first use it began sparking inside. I unplugged it and called GE. I explained what happened and the next day, I received a new microwave.

  • 1. I absolutely would focus my risk department on supply chain management. It is the integral part of company and the company cannot take the risk of bad publicity. Once there is a recall and human casualties the company or brand name may never recover.
    2 Thinking about human concern and not having products recalled it would be logical to spend their money up front. In the long run it may save a large company a fortune. If it cuts the budget and there was a mishap it could be costly or jeopardize the business.
    3. When Johnson @ Johnson recalled Tylenol. The company pulled every bottle off of every shelf in the country to ensure its customers safety. The bottles were being terrorized in a small area in the U.S. but J&J took every precaution. It cost them a crazy amount of money, but in the end Tylenol was able to uphold its Brand name.

  • 1. If you were the risk manager at a large company, would one of your main focuses for the company be on the supply chain process? Why?
    I don’t know if I would consider it to be an area where the most risk occurs but I think since the supply chain will show discrepancies it might be a good focus. It is very possible for small mistakes to lead to larger issues.

    2. Do you think it is irresponsible and potentially harmful to a company in the long run to reduce their supply chain and to not have the proper safety measures in place for the factories? Why or why not?
    It is extremely irresponsible, especially in the car industry. If safety precautions are reduced then it can cause serious issues which leads to high liability.

  • Definition of INSANITY – Doing the same thing over and over again and expecting a different result. Big business today and especially those involved the bailout continue to act like petulant children. One would think that GMAC would have used the $17.2BB bailout to synch up their supply chain and keep a magnifying glass on risk management to become the best car maker out there. Instead, like oil companies, they’re greedy and since they have not and will not take it upon themselves to true up their system, we again need government involvement.

    Example: the Apple Maps debacle. The apology letter issued by Tim Cook. Admittedly, “At Apple, we strive to make world-class products that deliver the best experience possible to our customers. With the launch of our new Maps last week, we fell short on this commitment.” Seems Apple has cut corners and is having a hard time keeping up with the pace they’ve set in their particular industry.

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