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Sheet A Publication for Members of the Warehousing Education and Research Council

MARCH/APRIL ????

Exposing Supply Chain

Vulnerabilities

WERCSheet's expert panel addresses risks? remediations? responses and trends S upply chains are a vital? critical part of DC/ warehouse operations? In fact? an organiza tion's supply chains' effectiveness and efficiency are often the deciding differential in the competi tive arena? Yet? for the awesome responsibility assumed by supply chains? their functionality can be severely impacted by disruptive forces?from both internal and external factors?

Focusing on the risks

"Fundamentally? there are two levels of supply chain risk? failure at the 'macro' level and the 'micro' level?" accord ing to

Steve Hopper?

principal? Inviscid Con? sulting? Marietta? GA? ?www?inviscidconsult? ing?com ?? While most of the emphasis has been on the big?picture risks at the macro?level of supply chains failures associated with procure ment sourcing transportation networks and so forth he emphasizes that it"s also wise to manage the microlevel risks associated with the blocking and tackling of warehousing distribution manu facturing and transportation operations

These risks include failures associated with

facilities equipment technology and information systems inventory labor safety and processes among others

“Supply chain professionals are quick to recog

nize the physical threats and prepare for them" shares Sandy Stephens? managing principal?

Johnson Stephens

Consulting? Inc??

Atlanta? ?

www?john sonstephens?com

Multiple facilities and

backup data centers?

Sheet MARCH/APRIL ????

WERCShee

t ?USPS # ??????? is published bi?monthly by the Warehousing Education and

Research Council? ???? Jorie Blvd?? Ste? ????

Oak Brook? IL ????

Phone? ??

Fax? ???

Email?

wercoffice@werc?org

Website?

www?werc?org

Annual membership dues are ????? including

??? for an annual subscription to

WERCSheet?

Periodicals postage rates paid at Oak Brook? IL

?Vol? ??? No?

POSTMASTER? Send address changes to

WERCShee

t? ???? Jorie Blvd?? Ste? ????

Oak Brook? IL ?????

?????? WERC assumes no responsibility for unsolicited manuscripts or other materials submitted for review?

Editor? Rita Coleman

Writers? Joseph Mazel and

Sara Pearson Specter

Copyright ©

???? by the Warehousing

Education and Research Council?

All rights reserved?

Reproduction in whole or part without written

permission is prohibited? Internet inquiries? www?werc?org? the floor? assuring proper maintenance of drain systems and ensuring there is no roof damage? "There isn't an excuse for not fixing/ repairing leaking roofs?" he maintains? "Nev ertheless? I have seen many tarps in warehouses used to protect goods from getting wet on a rainy day?"

Security and monitoring

Proper security at the docks and other

access points into the warehouse is critical? says Saenz? He recommends that a security gate for accessing the yard/facility is a critical design feature? In addition? securing the facility with cameras and audible exit alarms on all emergency doors is a positive deterrent?

Saenz shares his observation and experi

ence that there has been an increase in security protocols for entering buildings as a visitor? and an increase in the use of surveil lance in many facilities? "Many warehouses use security cages for the very high?value items? and restrict access to only certain personnel?" he notes? "Proper security limits/eliminates the loss of inventory and ensures employee safety?"

Stephens? noting supplier? and materi

als?related disruptions in the supply chain? calls for greater visibility and real?time moni toring? "Adoption of more sophisticated tracking technologies and visibility software products will be keys to supply chain risk management for global commerce?" he explains? "Keys to success will be enterprise metrics and monitoring by multi?disciplinary compliance teams?"

Risks relating to financial volatility and

political instability? are much broader threats than supply chain professionals alone can thwart? These threats? according to Ste phens? highlight the criticality and importance of including cross?functional teams in supply chain risk management?

Finance? legal? supply chain? sourcing and

others must be engaged to detect and mon itor events and performance on global? national? local and corporate scales? he shares? for example will mitigate the risks of weather and natural disasters or major acci dents

However he acknowledges “Still many

US companies rely on a single DC for cus

tomer order fulfillment and retail replenishment" and advises “Supply chain network optimization needs more focus on supply chain risk management to quantify the potentially insurmountable costs and odds of disaster in addition to logistics and operating expenses"

According to Stephens “Supply disrup

tions often can be recognized and averted by advanced planning and alternative sourc ing however as labor issues at US ports have taught us transportation disruptions may be difficult to overcome" Using multi ple ports may not be feasible for many importers whose networks are built on the foundation of the Inland Empire he notes

“Multiple ports will become a more

important piece of supply chain risk man agement as the impact of Panamax ships couples with the customer demands in our ecommerce society forcing shippers to locate closer to customers in multiple loca tions" Stephens forecasts

Fire and flood

"Fires have a big impact on warehouses? especially when they are jam packed with goods?" notes Norm Saenz? managing director? St? Onge Company? York? PA? ?www?stonge?com?? "Not designing the right fire protection systems can lead to damaged inventory and more importantly? harming employees?

The building sprinkler system and? in

some cases? in?rack sprinkler systems are required for proper protection against a fire? Based on warehouses visited over a period of ?? years? Saenz states? "Fire pro tection is probably being handled at above average and even outstanding for most operations? This is mostly because of the regulations and permit processes that forces the execution of the proper fire pro tection designs?"

Flooding/water damage is another risk

factor that results in significant loss of inven tory? according to Saenz? To reduce the impact of flooding and water damage from any source? he advises keeping stock off "Be aware? engaged? intentional and strategic to succeed with supply chain risk management?"

Sandy Stephens

MARCH/APRIL ????

Sheet Labor "A rising risk management factor is maintaining your labor force?" warns Saenz? "No operation can function without a labor force? even with robotics driving their way into warehouse operations? Finding and keeping your labor force is becoming increasingly more difficult? with the increase in minimum wages and competition for a quality workforce from neighboring facilities?"

With respect to the risk of losing labor?

warehouse executives/managers are seeing the need to revamp their staffing strategies? pay scales and environments? "With an ample labor pool in past years? this area may not have been as big a focus for some com panies?" explains Saenz? "Now? there is a fight for attracting the best employees and keeping them employed for the long term?"

Focusing on attracting and retaining

labor is a difficult task? and it cannot be solved by simply increasing everyone's pay? he insists? "For the worker being comfort? able? recognized and having a career path are just as important?" He also recommends considering the following initiatives? which he classifies as being "important?"

Pay market salary

Apply incentives bonuses paid time

off sporting/entertainment tickets team building events etc

Provide training and skill

improvement opportunities

Offer continuous training to

reduce frustration

Establish visibility into

company/business

Give recognition to all for a

job well done

Create a welldefined career path

Maintain a clean and safe work

environment

Include good health benefits

Develop shift staffing strategies such

as longer shifts for peak season early leave on low volume days

Risk management

program "In my experience? considering the sup ply chain industry at large? many DC/ warehouse professionals manage risk asso ciated with facilities? labor and inventory reasonably well?" Hopper acknowledges?

However? DC/warehouse professionals

may also underestimate? or have not seri ously considered? many risks associated with equipment? technology and informa tion systems? and processes? "They don't realize how seriously they are exposed in these areas?" he shares? "And when a failure happens? they are blindsided? and the consequences can be catastrophic?"

To avoid this scenario? he recommends

organizing and administering? "a simple but effective" risk management program based on FMEA ?Failure Mode and Effects Analy sis? methodology? As Hopper explains? the program should include the following?

Identify potential failures

Determine their likelihood of

occurrence

Determine their potential impact

?in the event they occur?

Objectively score and prioritize them

Develop and implement risk mitigation

policies that address high priority poten tial failures

Periodically repeat this process to accom

modate ongoing changes "Implementing a sensible and effective risk management program is like buying insurance?" says Hopper? "When a business can't fulfill orders? it loses both customers and money? Eliminating potential failures before they happen? and reducing their impact in the event they should happen? can save a business a lot of money? And it might save the business itself?" he continues?

As Stephens advises? "Be aware?

engaged? intentional and strategic to succeed with supply chain risk manage ment?"

FIG? ?

“No operation can

function without a labor force even with robotics driving their way into warehouse operations"

Norm Saenz

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