New types of contingency planning are required if expensive supply chain failures are to be avoided, warns leading specialist
Record levels of automotive supply chain failures are raising questions about the ability of existing planning techniques to cope with recovering manufacturing volumes. According to one specialist, today’s best-practice analysis and contingency planning systems are no longer sufficient to prevent delays in deliveries, which in the auto industry can result in losses of up to €1million every minute if a production line has to be stopped.
"We have clear evidence that failures are being caused by increasing production volumes pulling on already highly lean supply chains working across infrastructures that are often also pared to the bone," says emergency logistics specialist Brad Brennan, managing director of Evolution Time Critical. "Our biggest concern is that many companies are relying on contingency planning techniques that are no longer sufficiently robust to provide guaranteed on-time delivery."
"Take air charter as an example," continues Brennan. "We were recently asked to solve a problem when a manufacturer accurately identified a forthcoming issue with a large quantity of material needed to maintain production. They had tried to implement their traditional contingency plan of air charter, but that day all the spare capacity in the region had been booked by a vehicle manufacturer with a pressing ramp-up problem."
"The client’s plan did not look at this next level of failure," says Brennan. "The only solution they had been offered was to wait for an aircraft to reposition from an airport several hundred miles away after completing another delivery, adding a further four hour delay." In this instance, the Evolution team ascertained the arrival rate of product needed to maintain uninterrupted production and implemented a dual-mode solution. A light aircraft was available at a smaller airport, so this was immediately chartered to carry a small batch of components that would increase the time window available for the main shipment to arrive. A double-manned truck was then organised to deliver the balance of the shipment.
In another example, Brennan cites a customer awaiting urgent components that had been locked in a transit warehouse for the weekend: "We had to use our industry contacts and spend hours on the telephones on a Saturday afternoon to locate someone who could have the warehouse unlocked and help to us recover the critical parts."
Evolution describes unforeseen problems such as these as ‘second level failures’, where the planned emergency solution cannot be implemented. "It’s this level of failure that can shut a line down, maybe for a day or more," warns operations director Andrew Hampson.
The solution, says Hampson, is to make emergency logistics planning more embedded within lean supply chain analysis. "Asking one ‘what if’ is no longer enough," he warns. "In today’s highly leaned operating environments, we can’t rely on the fall-back solution always being available. Ask yourself, what would happen if this didn’t work?"
Evolution has been focusing on emergency logistics for the automotive industry since 2001 and today claims to be the leading global specialist in this sector. Brennan says this adds significantly to the analytical capabilities available to his clients, helping them to plan and to save money. "It’s no longer enough to see emergency logistics as no more than a sticking plaster. Vehicle manufacturers and their suppliers should be using the same analytical techniques that we use to look at all the scenarios, and to protect themselves from the potentially huge costs of a line stoppage."