The US government warnings about tainted imports from China are ominous and ongoing. In July 2007 poisonous chemicals were found in toothpaste. This was just a month after imports of farm-raised Chinese seafood and lead paint in Thomas the Tank Engine toy trains were detained. And May had seen contaminated pet foods sicken and kill thousand of US cats and dogs. Now its humans, when earlier this month every parents' nightmare became a reality: Melamine contaminated infant formula poisoned more than 50,000 Chinese infants and resulted in at least four deaths.
While much government attention focuses on the problems in China, experts say the emergence of these deficient goods highlights the risks associated with today’s global supply chains. The far-flung networks of suppliers and transportation systems connecting them to their destinations present a new set of challenges.
Longer supply chains mean more participants, and with that, come bigger risks. “There are more people that companies need to watch and make sure they trust,” says Yossi Sheffi, professor of engineering at MIT and an expert in risk analysis and supply chain management. Supplier visibility is a problem for many organizations, according to Mark Hillman, a research director at AMR Research, who says many companies operating globally don’t know every player in their supply chain as well as they should. In addition, increased speed means decreased time for product checks. Goods rarely stagnate in warehouses, so there is less opportunity to conduct quality checks, says Sheffi.
Such threats to the supply chain increase the importance of security, which like any other type of risk management, can be a hard sell. Getting it in place can be costly, and ROI is hard to justify, unless, of course, something goes wrong. The key to selling security, experts say, is to emphasize the collateral benefits—the kind of ROI that will be realized regardless of disaster. A 2006 Stanford report, which studied the supply chain behaviors of 11 logistics companies that are considered innovators in supply chain security, outlines some of those benefits: improved efficiency, better customer satisfaction, better inventory management, and reduced cycle and shipping time. (See a copy of the study here.)
Below are some of the most common supply chain risks according to Sheffi and Hillman, and ways you can manage them through security, resilience and vigilance.
What Can Go Wrong in a Global Supply Chain
The unexpected loss of a supplier: According to a study conducted by AMR Research in 2006, the number-one concern across industries is supplier failure and continuity. It’s particularly difficult to keep track of suppliers that may go out of business with little forewarning when you outsource, says Yossi Sheffi, an MIT professor and supply chain risk expert. “Suppliers in the US or Europe are easier to manage than those in the bowels of China.”
Geopolitical problems: A terrorist attack in the area of a major port can cause significant disruptions or shut down service altogether.
Damage to the brand: This could be related to product safety or counterfeiting, says Sheffi. “A company’s suppliers might be using child labor or sweatshops, or stealing intellectual property and copying the brand.”
Natural disasters and diseases: A hurricane near a major port, a disease outbreak (such as avian flu) or any other natural event over which there is limited control.
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CIO Live Podcast #79: Brent D Taylor, author of The Outsider's Edge: The Making of Self-Made Billionaires Part II 05 October, 2007 06:00:00
For his new book, The Outsider's Edge: The Making of Self-Made Billionaires, social researcher Brent D Taylor spent four years of intensive research investigating the psychological make-up and backgrounds of some of the world's richest men and women, including IT luminaries Bill Gates, Larry Ellison and Steve Jobs. Taylor discovered that, despite working in different industries and coming from different upbringings, they all have one thing in common -- they are all outsiders. - +
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For his new book, The Outsider's Edge: The Making of Self-Made Billionaires, social researcher Brent D Taylor spent four years of intensive research investigating the psychological make-up and backgrounds of some of the world's richest men and women, including IT luminaries Bill Gates, Larry Ellison and Steve Jobs. Taylor discovered that, despite working in different industries and coming from different upbringings, they all have one thing in common -- they are all outsiders. - +
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Part three in our three-part special report from CIO's sister publication Network World in the US, as Paul Desmond reports from the Network World IT Roadmap Conference in Santa Clara, California. With development teams in the US and Japan, Panasonic needed a more efficient way to move very large files between the two locations. Iben Rodriguez, IT consultant for Panasonic Research and Development, explains how a storage-area network and virtual server technology helped speed up WAN performance. - +
CIO Live Podcast #76: Panasonic Speeds Up Trans-Pacific File Transfers, Part II 14 September, 2007 07:00:00
Part two in our three-part special report from CIO's sister publication Network World in the US, as Paul Desmond reports from the Network World IT Roadmap Conference in Santa Clara, California. With development teams in the US and Japan, Panasonic needed a more efficient way to move very large files between the two locations. Iben Rodriguez, IT consultant for Panasonic Research and Development, explains how a storage-area network and virtual server technology helped speed up WAN performance. - +
CIO Live Podcast #75: Panasonic Speeds Up Trans-Pacific File Transfers, Part I 07 September, 2007 07:00:05
Part one in our three-part special report from CIO's sister publication Network World in the US, as Paul Desmond reports from the Network World IT Roadmap Conference in Santa Clara, California. With development teams in the US and Japan, Panasonic needed a more efficient way to move very large files between the two locations. Iben Rodriguez, IT consultant for Panasonic Research and Development, explains how a storage-area network and virtual server technology helped speed up WAN performance.
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Chris Hoff on Virtualization and Cloud Computing 20 November, 2008 10:55:00
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Cybersecurity is focus of new start-up incubator 20 November, 2008 07:19:00
Texas uni announces the Institute for Cyber Security.The University of Texas at San Antonio Tuesday announced a technology incubator aimed at fostering IT security-based start-ups within the state. - +
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Dilip Sarangan tracks physical security companies for Frost & Sullivan. He expects the industry's "need to have" products to weather the economic storm well, with the big players (now including IBM and Cisco) looking for value-priced acquisitions. - +
International Challenges in PCI Security 20 November, 2008 09:15:00
In a country that's seen many regulatory compliance challenges this decade, the headaches of PCI security tend to be analyzed from a largely American perspective. - +
PCI council sharpens oversight of security auditors 19 November, 2008 10:53:00
Quality assurance plan targets security assessors and scanning vendorsThe PCI Security Standards Council Monday unveiled a plan to sharpen oversight of the hundreds of security-service providers now authorized to evaluate merchant networks under the organization's Payment Card Industry data standards.
Vignette Announces 2008 Excellence Awards 21 November, 2008 10:50:00
PGP and Ponemon Institute Unveil Inaugural Australian Data Breach Study 2008 20 November, 2008 17:34:00
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AARNet Brings 4K Digital Cinema to Australia: First 4K HD Video Signal delivered into Australia by AARNet 20 November, 2008 12:02:00
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Delivering the Power of Choice with Microsoft Dynamics CRM
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