- Published: 03 - 08 - 20
- Written by: Andy Reed
Supply chain disruption has, as we’re all too aware, shot to prominence in the media recently. I thought it timely, then, to share with you some insight into the other ways supply chain problems can crop up and the exponential effect they can have on a business, before going on to talk about how we at Tharsus have developed ways of avoiding them.
For insight, let’s take two supply chain catastrophes.
Commercial oversights in supply chain
A few years back, successful US retailer Target, hit go on a plan to expand into Canada. The plan would see newly formed subsidiary Target Canada open 124 stores initially within a matter of months. A bold move in anybody’s books. Eyebrows would have been raised had it not been for Target’s reputation as a paradigm of corporate good governance, caution and well considered commercial strategy.
Eyebrows were raised though, when all 124 stores abruptly shut less than two years later. Canada hadn’t worked for Target. It had lost them $2.1 Billion.
While we’re on the retail disaster theme, here’s another one. A while back, a deeply embarrassed Mattel – a business which prided itself on responsible sourcing - was forced to recall a whopping 1.5 million toys after discovering the paint used on them contained potentially lethal doses of lead.
The self-proclaimed ‘World’s number one name in toys’ was suddenly a global pariah. Money and market share evaporated overnight.
So the supplier and distribution models were wrong?
Yes, that’s right.
Target’s undoing was they chose to use the same model of distribution from suppliers to warehouses and then into shops as they used in the US. The problem was they weren’t in the US. From an operations perspective, everything in Canada was very different. This became brutally apparent just after they’d opened the 124 stores. Warehouses creaked with excess stock while the stores, conversely, had virtually nothing in them. Not a hit with new customers.
In Mattel’s case, despite their diligence in vetting their suppliers, they didn’t consider their suppliers' suppliers. Or even the possibility they might have any. They had assumed one of their biggest suppliers painted toys themselves. In fact, painting was done by a network of global subcontractors operating in legislatures with wildly differing attitudes to toxicity.
So why does this happen?
All too often, organisations take a one size fits all approach to designing and building the chain of businesses who will supply goods and services to support their operational needs. In a world where the wrong kind of paint can bring a global giant to the verge of ruin, this is a dangerously wrong supply chain approach.
And that’s when you have goods and services readily available. In today’s challenging times -the largest global parts shortage in living memory- even the most flexible supply chains tailored minutely to the precise needs of the product are failing as industry norms turn turtle and the world turns literally upside down.
So the world of Supply Chain is hopeless at the moment?
Sounds it, but here at Tharsus supply chain has taken an alternative view. Quite simply, if the world turns upside down, then turn upside down with it. It’s working, too.
I’ll explain. To start with, we’re holding stock rather than relying on unreliable just in time delivery. This means tying up our working capital in a way we normally wouldn’t, but we’re putting our money where our mouth is to ensure we deliver for our customers.
We’ve invested in software developed by our digital team which is trawling the world wide web searching down individual part numbers across every website on it.
We’re building relationships throughout different tiers of our supply chains. The lines of communication created have led to parts we need gaining priority in their upward journey through the tiers, so getting to us quicker.
And they’re working. We’re running at 97.5% delivery at the moment.
So you’ve cracked it?
For now. Only for now. The way things are moving the world will certainly turn upside down again before we’ve out of this. And when it does, we’ll be ready for it.
Andy Reed is Director of Delivery at Tharsus