In March 2000, the Phillips Semiconductor plant (Albuquerque, NM) was shut down for six weeks after it was struck by lightning. The plant was responsible for producing electronic components for both Ericcson and Nokia. The six week shutdown led to a shortage of components and according to The Wall Street Journal, “company officials say they [Ericsson] lost at least $400 million in potential revenue” and “when the company revealed the damage from the fire for the first time publicly, its shares tumbled 14% in just hours” (Latour 2001). How is the severity of a supply chain disruption defined? An unplanned event slows down the flow (inbound/outbound) of products. The Phillip Semiconductor plant’s inability to ship conductors reduced Nokia and Ericsson’s ability to produce, distribute and sell products.
In today’s business world, organizations frequently face difficult operating challenges. In order to meet customer demand, businesses need to develop an implementable strategy that directs the company during a crisis. Disruptions in the supply chain are one of the primary reasons these types of business strategies are needed. The number of natural or manmade disasters has risen considerably over the past ten years. According to an article in Armageddon Online, “during the 2000 to 2009 period, there were 385 disasters, an increase of 233 percent since 1980 to 1989, and 67 percent since 1990 to 1999” (2010). Some other common supply chain disruptors are transportation delays, port stoppages, and poor communication between the company and supplier. More times than not, these types of events cause a bottleneck effect in the company’s supply chain.
The Need for Robust Strategy and Technology
These unpredictable occurrences are why it is imperative that today’s businesses develop robust strategies that minimize the effect of any type of operating challenge the company faces. According to Tang, these robust strategies must contain two properties. The first property he discusses is for the company to ensure its supply chain can deal with any type of disruption that may occur within the business. The second property is for the company to ensure their strategies make their supply chain more rigid and less susceptible to any type of slowdown in the face of a major disruption (2006). Robust strategies are important to identify when using supply chains. Another important tool for a business is the use of available technology (e.g., internet, communication systems, etc) which allows distributors and manufacturers the ability to perform real-time information swapping and computing.
Real-time enterprise is one way to ensure information breakdown is eliminated. Real-time enterprise makes certain that response times are reduced, by communicating with partners or customers. This allows businesses to share information throughout an enterprise, instead of keeping it within a section of the business. Other valuable benefits of Real-time...