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Route to Market & Supply Chain Blog

How would your FMCG or Pharma Supply Chain cope in a crisis?

Posted by Dave Jordan on Thu, Mar 24, 2011

We have seen some terrible natural disasters recently. The large earthquakes in New Zealand and Japan have ruined lives and caused unbelievable devastation. When you add in the political unrest in several countries and the recent UN mandate on Libya you can only wonder what else is to come. Of course, the immediate priority is saving lives but eventually rebuilding takes place and some sort of life resumes albeit of varying quality and probably with a very short term view of the future.

Crisis in Business Small resized 600Crises do not have to be on your doorstep or even very large but they can affect your supply chain in many ways, e.g.

  1. Raw materials are suddenly not available.
  2. Key people may be off line for some time.
  3. Transport may be diverted to humanitarian efforts.
  4. Your product or service may not be a priority or a necessity.
  5. Product for export may be taking up warehouse space for longer than anticipated.

Your crisis does not have to be a natural disaster. How would these incidents affect your business?

  1. Your supplying factory has a fire.
  2. Your 3PLP goes bankrupt – not uncommon!
  3. Your ERP is attacked by a virus and suffers meltdown.
  4. Your email client fails to function - imagine that chaos, can you live without email?
  5. The mobile phone networks crashes – at least travelling on public transport would be quieter.

Unless you live in a known hot-spot for natural disasters you really cannot predict what crisis will rear up and slap you in the face. How will you react? How will your business be affected? How can you prepare? Taking the above examples in isolation:

  1. If you rely on a single source factory then you are in trouble and should have a 3rd party production back-up plan in place. Few companies operate country dedicated factories these days so taking supply from the in-house factory network would be a solution. However, you still have to have the contingency in place.
  2. You may be lucky enough to get another 3PLP to take over the running in the existing location but which one? If you own the lease to buildings then this should be possible and there would be no shortage of willing partners. If the 3PLP owns the lease on building then you are at the mercy of the bankruptcy process which may demand the sale of all assets to settle debt.
  3. Well, you may find that your team is already operating a spreadsheet system under the radar! Your IT licence should include some sort of fall-back facility but it would be best to check. Larger companies will be backing up data regularly in a remote location so disruption can be minimised
  4. Again, the same applies on e mail with regard to data back-ups. With so many web-based email clients available you should not be offline for too long. However, you still need a reasonably recent address database or the start up will be very slow and painful.
  5. If your mobile telephone network crashes then you can always swap to another. Not a problem for a small number of users but it is a calamity if your organisation is contracted to company x AND the handsets are network-locked. Shock, horror; you may have to use that dusty old landline set. (Why do people use mobile phones to call colleagues in the same office on their mobile phone anyway? This really does happen.)

Should all five of the above occur in parallel then there are probably more important things to think about. A degree of preparation in anticipating what could go wrong and what to do about it could give your company an edge when it matters most. Crisis management needs to be in place BEFORE a crisis!

Tags: FMCG, Logistics Service Provider, Dave Jordan, Pharma, Logistics Management

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