Category Archives for "Supply Chain Security"

How Far Would You Go To Make Your Supply Chain More Secure?

Let’s start with a story illustrating how supply chain security irrevocably altered the fortunes of a company that was global leader in a very popular consumer electronics industry.

A High Profile Industry

This story is in public domain and involves two behemoths of the mobile phone industry at that time – Nokia and Ericcson. I tell this story in my book THE 5-STAR BUSINESS NETWORK.

Think of the time before Iphone and Samsung phones came along and conquered the supply chains of the industry, and the minds of the users. I tell that story elsewhere.

Here we focus on the simpler times.

An Uncontrollable Event

A seemingly trivial random event, on a fateful day in March 2000, changed the destiny of the industry.

Both Nokia, and Ericcson, the stalwarts in the mobile phone industry at that time, were equally impacted by the same event – a lightening fire in the chip manufacturing plant of their common supplier, Philips, in New Mexico.

Both Nokia and Ericsson experienced business disruption to an equal extent as a result.

Fire damage to the stocks was extensive

More importantly, the manufacturing capacity of the plant was damaged and it was difficult to estimate the time for repairs.

This is where the events take an interesting turn. Not everyone thinks of supply chain security beyond the physical security of goods in transit. For example only a few people think in terms of continuity of supply.

In fact, all the security experts who have no background in supply chain security fail on this count – they never think deep enough in terms of the layers of supply chain, while they do think deeply in terms of layers of physical security. Look at what happened in our real life story next.

Nokia had invested months, if not years, in creating and perfecting a robust and responsive supply chain security, while Ericsson’s business network was relatively a middle-of-the-line affair that worked well when things were good.

Ericcson staff were content to go with the flow, without too much care and worry about this part of supply chain security.

Nokia Sees the Future Before Ericcson, or Even Philips

After the fire, Nokia was able to see the full impact of the chip shortage on its own business, as well as the entire industry with a lot more clarity than Ericsson, and even Philips.

Moving quickly, it activated other parts of its business network to shore up supplies, to redesign some of the chips to manufacture them in other plants, and to take pre-emptive steps in the network.

Ericcson Did Not Move to Secure The Supply Chain; It Lost Out For Ever

Ericsson let the situation evolve at its own pace and made decisions more reactively.

The resulting gain in profitability and market share for Nokia and the loss of these for Ericsson tipped the balance of the industry to an extent where within a few years Nokia pulled far ahead of the Ericsson which never caught up with its erstwhile equal rival.

So, Why Do I Tell This Story?

It does have some anecdotal entertainment value.

But the moral value is even higher. Here are some things to ponder:

  1. Supply Chain Security is a layered affair – for the best results organise it as such:
    1. Supply Chain Layers
    2. Physical Security Layers
    3. Virtual Security Layers
  2. A random event can change the fortunes of an industry
  3. Better prepared companies generally wins in such events
  4. You do not need to be perfect, you just need to be better than your competitors
  5. If you don’t work to keep the supply chain advantage, you will lose it in a jiffy:
    1. Ericcson lost out to Nokia
    2. Nokia eventually lost out to IPhone (that is a story, I tell elsewhere in my posts)
  6. Supply chain advantage, when you have it, translates into industry leadership, fat margins and cushy life.
  7. Supply chain security is directly corelated with supply chain advantage. DO NOT IGNORE SUPPLY CHAIN SECURITY.

I could easily turn this above 7 point list into a large magazine article (listicle), but my readership is wise enough to connect the dots themselves, and do not need ot labour through the obvious.

Given the quality of my readership – I have created a 350 page report on supply chain security – which is available at a small (or relatively trivial) expense by sending an email to info@globalscgroup.com

If you really want to pay due attention to supply chain security there will be nothing comparable on this globe – get this report NOW by directly emailing me.

Opportunities for Start-ups in Supply Chain Security

People often wonder where the best opportunities for start-ups are. Supply Chain Security space is getting a lot of attention in this regard.

In fact, just today someone asked me on a popular platform about opportunities for start-ups in Supply Chain Security space . They wonder whether these were more in software, or consulting arena.

Here is my view:

It would be neither of those two. Rather it will be a combination of hardware and software – initial application know-how will have to come from the user side.

Let me explain.

Post-2001 (911) the world of supply chain security has changed dramatically. The regulatory environment has evolved dramatically (as we explain in my report Global Supply Chain Group’s SUPPLY CHAIN SECURITY REPORT). But that is not the only change. Almost everything – customer innocence, political and cultural norms, technology and particularly technology – has evolved dramatically as is explained in this report.

Most importantly – the threat perception has evolved considerably. Look at the diagram below which summarises the supply chain threats over the decades:

So far, this is common sense representation of common knowledge. What is not common knowledge is how technology has evolved in response to these trends.

There are at least 6 technological streams which find applications in supply chain security. You will find them in the report, or in this survey on supply chain security – Supply Chain Security Survey

But the most interesting insight in the report is that almost all the opportunities offered are in combinations of hardware, software and some know-how in the application.

That is not to say that pure-play companies do not exist. In fact, many companies have evolved to products with a considerable component of application know-how. In mature products that is always going to be the case.

But, for a start-up, a combination of hardware, software and some application know-how is the best bet

The Trouble With Supply Chain Security

I know that Supply Chain Security is not the top of mind of anyone. Least of all for people who are so busy all day, every day that they barely have time to take a meal break.

I am, of course, talking about the supply chain managers. The mobile does not stop ringing from the time they take it off silent in the morning, to the time they are ready to crash. If it is not a customer calling about “another botched-up delivery”, it is one of the service providers calling about ‘another unpaid invoice”.

Literally, hundreds of things can go wrong as millions of things are moving around 24X7. And, sometimes they wrong, all at once. Like when a customer threatens to walk away, AND, a supplier takes you to court.

Nobody thinks of supply chain security until it is too late

Who has time to think of Supply Chain Security in the midst of all this? Only those who are most serious about their careers in the supply chain.

“Why is that the case” you ask? I think, by the end of this article the answer will be crystal clear to you.

Listen, I have written in many places earlier that the traditional supply chain model is gradually failing and will be relaced by a suplly chain model which is radically different.

It is true! Think about Sears, and all the others who were blindly copying Sears in the 80’s and 90’s. It gives me no pleasure to name all the favourites of the yesteryears in this context.

Anyway, you would have to be living under a rock not to know the names I am talking about. And, by the end of 2019, there will be many more names to add to that list.

But, this article is not meant to compare and contrast the supply chain models of yesterday, today and tomorrow. I will write a different article soon to cover that important point.

2019 is different

The point to pay attention is that 2019 is edgy. Things move slowly, but in a ‘definitive direction’. And this is the main point – careers are more important today, than in the past 20 years.

Nothing has bigger impact on a career than a major incident in the supply chain. What’s a major incident?

Take a look at the 1 minute video below to get a sense of the issue:

https://www.youtube.com/watch?v=_VZ4AaBhHKU
When everyone is scrambling around for answers…

But, sabotage is not the only type of potential incident that can hit your supply chain. There are many other types of potential incidents.

In fact, in a project last year we identified at least seven types of potential supply chain risks – each with very complex supply chain implications.

Threats To Supply Chain Security

Even making a list of all the different types of potential supply chain security breaches and related incidents is difficult. One you go past the most obvious ones – where do you stop? And, how do you neatly group them?

Take a look at the figure below:

(Source: Global Supply Chain Group’s SUPPLY CHAIN SECURITY REPORT – 2019)

the risk assessment and mitigation work in supply chain is extremely painstaking and thorough. All the projects that we have done which involve this kind of work have left me dissatisfied despite the projects being quite lucrative, and enlightening.

Why do I say that?

Because no matter how much you know – you cannot make a list of everything you don’t know that can happen. And that is just the trouble with the qualitative part of supply chain security and risk management.

On the quantitative side, it is even worse.

Try multiplying infinity by infinity. How do you assess the probabilities of something that has never happened before, but is likely to happen at some point in future? And, then how do you assess the full repercussions of that event, up and down the supply chain?

There is a tendency in our planning to confuse the unfamiliar with the improbable. (Thomas Schelling)

Did you know that in 2000 Ericsson permanently lost its pre-eminence in mobile phones market to Nokia mainly due to a fire in a chip factory owned by Philips. This is no place to tell the full story. That story is told on page 9 of my book The 5-STAR Business Network.

How did Nokia lose its crown to Apple due to its supply chain missteps is another story worth talking about. As is the story currently underway, how Apple is losing its crown due to its supply chain missteps.

But I digress. Let’s get back to the talk of supply chain security. People ask me why is supply chain security is such a dismal state that only by sheer providence (and goodness of population in general) we do not more incidents.

ABC of ‘Supply Chain’ “Security”

The main reason is this – most security professionals do not even know ABC of supply chains, and most supply chain professionals bother about only ABC of security.

A secondary reason is that it is just too difficult to secure supply chains with the current level of resorcing in most companies.

Think about this:

The truth is that there are so many moving parts in today’s supply chain that it is impossible to keep track of them all with the current level of supply chain resourcing.

And, companies are always reluctant to give more resources for anything, especially something as ‘unproductive’ as security, unless justified by a bulletproof spreadsheet vetted three times over by the most painstaking auditors.

Who will cop the blame for breaches of Supply Chain Security?

All this would not matter in the past when everyone could pretend that every security breach incident was a one-off, “could not be foreseen or prevented” kind.

Today, irrespective of whether it could be prevented or not, everyone – regulators, governments and public – are hyper-vigilant, and clamour for someone to blame. And guess who is going to cop most of the blame? The person who cops most of the blame when anything goes wrong in the entire supply chain – The Supply Chain Manager.

That trend is only going to escalate. And, that is the “Trouble With Supply Chain Security”.

Notes:

  1. We have created a supply chain security survey which can give you more ideas on important aspects of Supply Chain Security. If you are interested, here is the link for the survey.
  2. We also have a report titled Global Supply Chain Group’s GUIDE TO SUPPLY CHAIN SECURITY. If you are interested in this report, write to info@globalscgroup.com

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