What Is Supply Chain Event Management?

Supply Chain Crisis Management is one of the important measures to ensure the normal operation of the supply chain and improve the reliability of the supply chain. The supply chain connects suppliers, manufacturers, distributors, and users at the same time. The structure is very complicated. There is a potential crisis in each link. If any link fails, it will have a serious impact on the entire supply chain. Supply chain crisis management refers to a series of actions and countermeasures to deal with the crisis in order to get out of the crisis and maintain the normal operation of the supply chain when the supply chain is in crisis.

Supply chain crisis management

Supply Chain Crisis Management is one of the important measures to ensure the normal operation of the supply chain and improve the reliability of the supply chain. Simultaneous supply chain connections

Supply Chain Crisis Management (Supply Chain Crisis Management) is a series of actions and countermeasures to deal with crisis in order to get out of crisis and maintain the normal operation of the supply chain.

Supply chain crisis management has the following characteristics:

The key to supply chain crisis management is crisis prevention.

Many researchers and users are constantly researching and exploring how the supply chain can achieve the best results, but the research is generally focused on the normal situation. But in reality. The supply chain will encounter catastrophic events or sudden obstacles. How should the supply chain process respond? face

Many researchers and users are constantly researching and exploring how the supply chain can achieve the best results, but the research is generally focused on the normal situation. But in reality. The supply chain will encounter catastrophic events or sudden obstacles. How should the supply chain process respond? Faced with SARS events, the US-Iraq war, and terrorist attacks, this theory has received even greater attention. American management scientist-Contz once said that "businesses are not worried about normal incidents, and most worried about emergencies." Crises or emergencies from inside and outside the company may come up at any time in the dead spots of enterprise management, supply The same goes for chains.

Both supply chain and logistics have fragile sides, even in the developed countries of the United States. Fei Chi and Qu Ke, two professors in the Department of Supply Chain Management at the University of Michigan, have completed a survey to prove this. The reason why they are always vulnerable is that logistics or supply chain users rarely formulate effective crisis response strategies at all, so when they encounter unexpected events, they are immediately helpless, so crisis management is also needed in the supply chain.

I. A potential crisis lies in the supply chain

According to crisis management theory, we should first analyze which crises are lurking in the supply chain. The crisis of the supply chain comes from many aspects. In simple terms, it can be divided into two categories:

1. Natural disasters, typhoons, earthquakes, floods, snow disasters, diseases and other damage and attacks from nature threaten the security of the supply chain at all times. The fire at Philips was caused by the destruction of nature. The thunder and lightning in the storm caused the high voltage to increase, and the sudden rise in voltage generated electric sparks to ignite the fire in the workshop. In another example, the "9.21" earthquake in Taiwan caused a shock in the global IT industry. In addition, SARS has caused many enterprises to face unprecedented crisis, and the aviation, catering, tourism and other service industries have been hit hard. Human beings are generally facing the problem of environmental degradation and the frequency of natural disasters is getting higher and higher. As a force majeure, it will become a lethal killer of the supply chain.

Human factors

(1) The chain reaction of the supply chain. A complete supply chain system can certainly save costs and speed up the production and development of products, but because the supply chain connects suppliers, manufacturers, distributors and customers at the same time, the structure is becoming more and more complex, and every link is potentially latent. If one of the companies has a problem, it may have a chain reaction that affects many companies in the supply chain, so the destructive power is greater than ever before, especially when some companies in the supply chain are exclusive suppliers. The crisis is even greater. The emergence of exclusive suppliers in the supply chain is the result of various conflicts of interest. From the case of Ericsson, it can be seen that there is a huge risk in adopting an exclusive supplier policy: if there is a problem in one link, the entire chain will collapse.

(2) Defects in IT technology will restrict the role of the supply chain. Such as the network transmission speed, the stability and running speed of the server, the flaws in the software design, as well as the viruses that are invincible in every corner.

(3) Problems in information transmission. As the scale of the supply chain increases and the structure becomes more complicated, the chances of information errors in the supply chain will also increase, such as: information input errors, misunderstandings and waiting.

(4) Problems in corporate culture. Different enterprises generally have their own corporate culture, corporate management concepts, cultural systems, professional qualities and professionalism of employees. Different corporate cultures will lead to different views on the same problem, thus adopting different treatment methods, and finally output different results. How to coordinate different corporate cultures among supply chain members is also a headache for manufacturers in the supply chain.

(5) Political and economic turmoil. The most obvious are terrorist attacks and strikes. After the "9.11" incident, all airports and ports in the United States were closed for several days, and flights and schedules were all delayed, and the cargo could not enter the United States immediately. In the years after the "9.11" incident, the world has experienced many crises such as the South American financial turmoil, the strike of US shipping workers, and the Iraq war. In the era of globalization, the strike of a group of US marine workers has caused a disruption in the global supply chain. In addition, rapid economic growth can easily lead to shortages in the supply of raw materials, which affects the normal production of enterprises, and economic depression will increase the cost of product inventory.

Responses to supply chain crises

From the supply chain crisis described above, we can see that some crises are controllable and some are uncontrollable. We can respond to different characteristics of the crisis.

Generally speaking, supply chain crisis management can be divided into crisis prevention and emergency management. Crisis prevention refers to how to prevent a crisis from occurring; while emergency management refers to what measures should be taken to reduce or transfer a crisis in the face of a crisis, and minimize the possible harm caused by the crisis. Some dangers, such as the loss of key personnel, loss of technology, loss of key customers, product reputation, and contract risks, can be prevented by crisis prevention measures; and for unforeseen crises such as terrorist attacks and SARS, they can only be properly resolved through emergency management. Measures that can be taken for supply chain crisis management are:

1. Establish a crisis awareness of "born in sorrow." Crisis awareness does not refer to all management awareness that can prevent and respond to corporate crisis. It refers specifically to the thinking consciousness of preventing and responding to corporate crisis. Bill Gates's "Microsoft's bankruptcy will only be 18 months" and Zhang Ruimin's "My daily mood is like walking on thin ice, such as near the abyss" and Ren Zhengfei's "Huawei will always have winter, ready to wear cotton, better than not" And the crisis views of all the outstanding domestic business leaders are the essence of their respective successful business crisis awareness.

2. Develop multiple supply channels, multi-regional supply channels, and track and evaluate the situation of suppliers. In order to ensure stable product supply, multiple supply channels should be developed in the supply chain. You cannot rely solely on a single supplier. If something goes wrong, it will inevitably affect the normal operation of the entire supply chain. At the same time, when relying on certain supply materials or products, geographical risks must also be considered. For example, the war will interrupt the supply of raw materials in some regions. If there is no supply in other regions, it will inevitably cause a crisis. In addition to establishing multiple regions and multiple suppliers, it is necessary to track the situation of each supplier and keep track of the suppliers Availability.

3. Form a strategic partnership with suppliers. In the supply chain, strategic partnership means that the relationship between the manufacturer and the supplier is not only the relationship between the buyer and the seller, but more importantly, a partnership or even a friend relationship. The two parties should have more aspects besides buying and selling. In order to establish long-term cooperative relationships with suppliers that provide trust, cooperation and open exchanges, we must first analyze the market competition environment. The purpose is to find out which product markets are effective in developing supply chain partnerships. We must know that the needs of our products are What is the type and characteristics of the product to determine the user's needs, confirm whether it is necessary to establish a supply chain cooperation relationship, and if a supply chain cooperation relationship has been established, the supplier's performance, equipment management, human resource development, quality control , Cost control, technology development, customer satisfaction, delivery agreement and other aspects should also be fully investigated, it is likely to become a factor affecting the security of the supply chain. Once a supplier is found to have a problem, the supply chain strategy should be adjusted in a timely manner.

4. Establish multiple information transmission channels to prevent information risks Manufacturers-consumers-suppliers play multiple roles in the supply chain. The interaction between them is accelerating day by day, and the relationship is becoming more and more complicated. This requires that the supporting network infrastructure must ensure the integrity, reliability and security of the data required by the supply chain.

5. Enterprises should formulate emergency management measures to deal with emergencies. The supply chain is a complex system with multiple links and multiple channels, and it is easy for some emergencies to occur. In supply chain management, the occurrence of emergencies must be sufficient Preparation. For some occasional but destructive major events, contingency measures can be formulated in advance, work procedures for responding to emergencies, and a crisis management team can be established. Enterprises should set up an internal crisis management team as soon as possible, and start the crisis response plan at the fastest speed. At the same time, they should respond to changes at any time and revise and enrich crisis management countermeasures at any time.

6. Rely on third-party logistics to develop emergency logistics and reduce supply chain risks. Under normal circumstances, logistics is a difficult and obstacle in the implementation of supply chain management. Many companies are generally used to their own logistics. This kind of logistics lacks professionalism. When disasters or emergencies come, the ability to resist the crisis is limited, and the company will immediately feel helpless. Third-party logistics service providers usually have extensive and professional logistics networks. Once a certain line has a problem, they can immediately change the route and still operate normally. Therefore, through cooperation with third-party logistics companies, enterprises can establish a reasonable division of labor in the supply chain, which can not only reduce operating costs and improve operating levels, but also effectively diversify risks and enhance their ability to resist crisis. Anyway. The purpose of crisis management is not to avoid crises 100%, but to understand which crises will be faced, which ones can be prevented, and what measures should be taken to reduce or divert crises when they occur, and to make the crises possible Harm is minimized.

3. How to use crisis management in the supply chain to turn "crisis" into "opportunity".

1. Dell's crisis awareness In the handling of the "9.11" crisis, due to Dell's consideration of the worst situation and related plans, it finally turned the risk. After the "9.11" incident, the United States immediately announced the blockade of airports and suspended all flights Flying into the United States. This is undoubtedly the biggest crisis for Dell based on global procurement. However, the crisis management processing team and global supply chain monitoring team set up by Dell immediately played a role, working closely with the agent processing manufacturers to find cargo planes flying by-pass, and shipping air-based products such as laptops to other US states The country then pulled the cargo into the United States. In the sars crisis, in order to cope with possible supply chain disruptions, Dell took precautions and raised its foundry inventory long before the sars climax broke. Dell's crisis management has been quite perfect, but still has a high sense of crisis at all times, so that Dell can survive in a desperate place and turn "crisis" into "opportunity". With each crisis, the processing capabilities of Dell's crisis management team have been continuously improved. Perhaps the crisis is the beginning of new opportunities for companies like Dell.

2. Efficient emergency management. On September 21, 1999, a magnitude 7.3 earthquake hit the market town of Taiwan, and the power supply system was damaged. Chip production in the Hsinchu Hi-Tech Park, the highest density in Taiwan's wafer fabs, came to a halt. Damage to equipment from manufacturers such as TSMC has severely tested the world's largest wafer equipment supplier Applied Materials. Within 3 minutes of the incident, Applied Materials immediately convened members of the "Emergency Response Team" to the disaster site, and immediately completed the restoration of the company's damage at 7 pm on the same day. At the same time, the company quickly reported the damage to the US headquarters. The headquarters immediately organized an 18-person safety evaluation team to arrive in Taiwan with test equipment to actively assist customers in post-disaster reconstruction. In addition, the headquarters also mobilized equipment engineers from Japan, South Korea, and other places to Taiwan to help customers complete production recovery as soon as possible, and set up a Taiwan earthquake recovery project team to coordinate global material supply to assist Taiwan's post-disaster recovery. The head office of Applied Materials in the United States has always been prepared for crisis response emergency response teams. The company will set up task teams for each group member on a part-time basis, and conduct fixed drills every month, so that emergency response teams can be at the first time at any time. Internally and efficiently handle incidents and disasters in France. The company has further set up a "continuous operation plan" and has prepared contingency rules. The detailed content defines the types of crisis that the company may encounter. Each crisis handling process and emergency liaison personnel and contact methods, formulate a contingency plan in advance to help the company and customers handle the crisis in the fastest and most efficient way, reducing the impact to lowest.

3. Nokia is well prepared. In March 2000, a lightning strike struck Philips' semiconductor plant in Albuquerque, the U.S.A., causing a fire that damaged millions of chips that were being produced in the plant. The fire almost destroyed the plant and changed the fate of two of Europe's largest mobile phone makers, as 40% of the radio frequency chips at the plant were ordered by Nokia and Ericsson. At that time, it was the time when the market demand was the strongest. In the mid-1990s, Ericsson simplified his supply chain in order to save costs. Basically, backup suppliers were excluded. There were no chips that other companies could produce. Philips' chip factory could not supply normally for several weeks. Shortage and suspension. Because of slowness. Without a timely and effective response, Ericsson watched the market of millions of mobile phones dwindle rapidly. The mobile phone business lost $ 700 million in the year, and finally had to bear the pain of outsourcing mobile phone manufacturing. The strong logistical force made Nokia lucky to escape from this disaster. In the face of the sudden crisis, Nokia's chip procurement department responded quickly and actively considered other sources of supply. Nokia CEO Olila spent two weeks persuading a Danish company to contribute some factories as a backup supplier for Nokia. At the same time, the Finns also redesigned the relevant modules and chips of the mobile phone, and quickly found the chips in Japan and the United States. Manufacturer, it takes only 5 days to prepare from order to production. In the following time, Nokia grabbed a large market share from Ericsson. A crisis has caused market forces to shift hands between two competitors.