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PAPP: Sixth-Sense Solution for the Supply Chain

Natural disasters may be unavoidable, but the global manufacturing supply chain can limit the impact of such calamities by sharpening rather than ignoring its “nose for trouble” — the sixth sense or perils avoidance system.

When catastrophes strike, as they have often done in the manufacturing world, the best and most efficient supply chain systems aren't always those with the most comprehensive or expensive disaster management programs. At such moments and afterward, industry executives celebrate the supply chain that most quietly continued to hum, seemingly panic-free and creating the illusion that the enterprise merely had been lucky to be spared the worst of the calamity unfolding around it.

What characterizes and separates such a supply chain from others? It's having people — usually top managers — who with experience have developed a finely honed sixth sense they use to forecast, anticipate, prepare for, shield, and even inoculate their companies against the havoc of natural and unnatural disasters. How can anyone predict and protect the enterprise against natural disasters? It may not be possible always to shield an enterprise from events such as the 2011 earthquake and tsunami in Japan, but with sixth sense awareness, a company's exposure could be severely limited.

Anecdotally, this represents the difference between a township that has a great fire company — with all the bells and whistles needed to put out the worst conflagration quickly and efficiently — and another township with the fewest such emergencies within a defined period. In other words, one community is specialized in rapid response and overwhelming-force emergency management, while the other's approach is wrapped around a more subtle, yet effective and cost-efficient, program based on a system I have named PAPP — Predict, Anticipate, Prepare, Protect.

PAPP is not voodoo stuff. It is a system I can best describe as “premonition management,” which itself is not new to the business environment. Andrew Grove, ex-president and CEO of chipmaker Intel Corp., summed it up in the phrase “Only the paranoid survive,” the title of his book published in 1997. PAPP doesn't imply the belief in or a slide into the supernatural world. Rather, it is centered on the premise that an enterprise that manages its operations, facilities, and supply chain mechanism by emphasizing intelligence gathering, prediction analysis, constant awareness, prevention programs, and agility is more likely to avoid and limit the impact of business jeopardies than one that is focused purely on disaster management.

Here's how this works for best-practices companies: The supply chain at such enterprises is constantly gathering information not just about the business sector but also on events throughout the global economy and the geo-political sphere. Supply chain executives at such enterprises demand and receive constant updates on political developments in various countries where the company has operations. The data they request range from what we all would expect (such as economic status, infrastructure, availability of capital, and human resources, etc.) to information about the religious environment, geographical location, political developments, resolved and unresolved communal disagreements, natural disaster history, and potential for other disasters.

Based on the information gathered and after proper analysis, supply chain executives can then offer C-level executives intelligence padded with their own sixth sense summary to be used in deciding where to locate manufacturing facilities, what kind of support structure to put in place, how to anticipate and prepare for disasters, and minimize the impact of potential disturbances. PAPP is used to make critical decision such as where to avoid when picking sites for facilities — notwithstanding the known cost-advantages — and the type of security systems to install to assure safety of personnel, factories, and products.

Sixth sense supply chain management isn't about getting predictions right. Many forecasts based on PAPP will not happen. The best supply chain executives embrace such failures, and they don't crow loudly about the ones they got right either. Their goal is to ensure operations run smoothly, whether or not conditions are optimal. They aim to avoid rather than contain disasters, but they are as equally or even better prepared when catastrophe happens than companies that spend heavily on disaster containment programs.

I believe sixth sense supply chain management is about being smart in responding to what is essentially a volatile global manufacturing environment. Tim Carroll, vice president of integrated supply chain at IBM Corp., said it best in his introduction to the company's Global Chief Supply Chain Officer report:

    A crisis in some far-flung country can now spread very quickly across the world economy, creating tremendous turbulence. As our supply chains have become more intertwined, none of us is immune. To deal effectively with risk and meet your business objectives, we believe supply chains must become a lot smarter.

The smart supply chain Carroll talks about, in my opinion, is predictive and not merely reactive. That means having a nose for trouble — a sixth sense — for what can go wrong and minimizing exposure to such situations.

10 comments on “PAPP: Sixth-Sense Solution for the Supply Chain

  1. FreeBird
    February 4, 2013

    It's about time someone recognized the human element of supply chain management. Although automation has vastly improved the type of data collected; the analysis of the data; and programs that can respond to certain events; only people can build the kind of relationships where you can call someone when you are in a bind or establish trusted relationships. I think too heavy a reliance on automation and analysis could ultimately set the supply chain back.

  2. bolaji ojo
    February 5, 2013

    You can automate a lot of things but it takes the human touch to either inject into or extract from data what does or doesn't quite make sense. I believe you can't take humans out of this situation completely and the role of an experienced executive shouldn't be undervalued.

  3. Ariella
    February 5, 2013

    @Bolaji I agree. Humans are the ones who have to think about what questions they want answered when they start mining data. They also have to consider what to do about what the data reveals. 

  4. prabhakar_deosthali
    February 6, 2013

    In my opinion, in this world of automated systems and data analytics it is the human element which acts as a sixth sense in a critical situation and makes the right hunches and decisions and it is the human relationships that help companies to come out of crisis situation where the hard facts generated by the smart analytics fail to help come out of a tricky situation. This is because with the human relationships you can sometimes bend the rules , walk some extra mile and sometimes even put one's own job at stake to help someone in distress.

  5. elctrnx_lyf
    February 6, 2013

    I completely agree every big OEM who want to sell their products across the world should keenely look into all the issues that can impact their supply chain and in the end operations of the company. Xperienced people come to the resue of these conglomorates and can predict the future and shield the company from any major disasters.

  6. ITempire
    February 6, 2013

    @ Freebird

    True. Automation is there to help humans rather than replace the tasks they undertake completely. As Bolaji and Ariella said, human is the one who is responsible for the results that technology gives. Over-reliance on technology is neither effective nor possible as the technology makes performance of operational tasks easier but the thinking behind what to perform remains that of human. 

  7. ITempire
    February 6, 2013

    @ Elctrnx_lyf

    It is important to weigh the pros and cons of setting up a facility in a disaster-prone area. For e.g. if you think that a car manufacturing project requires advanced technology specific to automobile industry and Japan is the right place to manufacture then despite knowing that Japan comes on the earthquake belt, you have to setup the facility there. To counter the disaster, however, additional investment on making the manufacturing facility tolerant to the disaster will do the job.

  8. ITempire
    February 6, 2013

    In all scenarios, the role of leadership when it comes to tackling disasters is important. Some leaders are not very cautious and might risk the damage from disasters and save significant costs on preventive measures as it is possible that even if the natural disaster comes, the facility remains unaffected. Other leaders will not risk one bit the continuity of operations and will be willing to invest alot in preventive measures.

  9. _hm
    February 7, 2013

    This may be good in very long term, if dissaster really happens. But, how much more will it cost to consumer and share holder in short term for this additional quintessence actions? In difficult days, it may be discouraging to act on this.

     

  10. Greg Riemer
    February 8, 2013

    I would agree with everyone that the human element should play a major role when developing and implementing risk strategies to limit the impact of these disasters. Control towers and managed TMS solutions give companies an extra set of eyes on the ground in these regions. A global TMS solution with a managed services allows companies the ability to drill down and know what specifics SKU's and PO's could be impacted with such disasters which helps when creating prevention strategies or response plans.

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