THE SEVEN DEADLY SINS OF SUPPLY CHAIN CRISIS MANAGEMENT

The government has announced that the recession we experienced for several years is officially over; but there still is considerable doubt in the minds of some supply chain managers that it is in fact behind us. In a number of firms layoffs have continued, and unemployment in some areas is higher than we would like.  For some companies, transportation capacity has continued to be a problem even though shipping volumes have been reduced. Transportation rates have continued to increase, and more increases are projected for this year. In some cases, inventories have been reduced to the point that it is difficult to meet customer demands, even the minimal ones. In short, many front line distribution center managers are still being asked to do more with less.

That does not mean that all is lost, however. As Friedrich Nietzsche said, “That which does not destroy us makes us stronger.” While this may be difficult to accept some days, most of us have found this to be true. As we learned to navigate new courses dictated by the challenging times however, we picked up some bad habits some of which have remained with us even though conditions have improved. It is important that we learn from our experiences and try to set these aside. I have called the more conspicuous ones the seven deadly sins of supply chain crisis management. (These are not to be confused with the original seven deadly sins – lust, gluttony, greed, sloth, wrath, envy, and pride – although I suspect some of these are around as well.) What follows is a summary of the supply chain crisis management sins, as I see them.

Fear – The first emotion many of us felt when the economy took its abrupt downturn was fear – fear of losing our jobs, our 401(k) funds, our credibility. While it would be naïve not to be concerned, fear can be a very destructive emotion. We don’t work well when we’re afraid. In the final analysis, most of us will survive, and we must try to push the fear aside and channel our energies toward problem solving. We must also try to ensure that our employees are not afraid… Be honest and straightforward and be sure that they always know where they stand. Uncertainty does not make for a high level of comfort among the work force.

Panic – Panic usually follows on the heels of fear, and that is not the time to make sudden and drastic changes in carriers and other types of service providers, operating procedures, or in distribution networks. Planning should be substituted for panic. Move deliberately and cautiously. These are volatile times. What is true today may not be so tomorrow. While you must be flexible and adjust to new conditions, do not impulsively proceed without the proper planning.

Short – Term Thinking – There has been temptation and pressure to make decisions based on quick fixes and immediate short – term savings. This can be particularly true with technology. We have spent years developing technology in the warehousing industry, some of which is not inexpensive. There may be a temptation to say, “Forget information is power. Show me the money.” This course of action will not serve you well over the long term. We must stay on top of the latest systems, whether existing or new.

Greed – There is never a good time to take advantage of carriers or other service providers that may have excess capacity. It is in our best interests for our logistics service providers to stay healthy, and remain available to provide the resources and choices that we will need to do our job effectively. Remember: what goes around comes around.

Hostility – When we get stressed, we sometimes treat our supply chain partners poorly. Negotiations can quickly turn adversarial or hostile. Even though we may not agree on courses of action, we will be more successful over the long run if we treat our partners with sensitivity and courtesy.

Dishonesty – Hopefully, this requires no explanation. But be aware that adversity can bring out the worst in people. Don’t be tempted to relax you own standards of moral and ethical behavior, or allow your employees to relax theirs.

Complacency – Finally, the worst option you can choose is to do nothing. While we shouldn’t panic, neither should we sit idly by nor expect everything to work out in the end. Whether in good times or times of crisis, the distribution managers who succeed will be those who are proactive, thoughtful, and unafraid to make bold, but well – planned moves.

We will never be back to where we were in pre-recession years, and freedom to act may be inhibited by corporate management or policies. But to the extent you can, continue to manage your facilities, employees, and supply chain relationships professionally and intelligently through both good times and bad.

Written By: Clifford F. Lynch