Reduce Supply Chain Interruption Risks - Automate
2/6/2012 1:12:00 PM
Year-end business reviews for 2011 point to a weak link in corporate practices that can bring even the mightiest of organizations to its knees in a time of crisis. That weak link is the lack of multiple suppliers that are dependable and readily available, according to the January 11, 2012, Wall StreetJournal story, "Reinforcing the Supply Chain," by Maxwell Murphy. The story highlighted the vulnerabilities of companies that dependupon a single supplier only to have that supplier rendered powerless to deliver due to a disaster, such as the earthquake and tsunami in Japan, or the Arab Spring uprisings that closed businesses in the Middle East.
Closer to home, tornadoes struck Joplin, Missouri, and Tuscaloosa, Alabama, and Hurricane Irene flooding swallowed many parts of the Northeast. All told, the United States had a record 10 weather catastrophes in 2011 costing more than a billion dollars -- five separate tornado outbreaks, Hurricane Irene, two different majorriver floods in the Upper Midwest and the Mississippi River, drought in the Southwest and a blizzard that crippled the Midwest and Northeast.
With many disasters, natural and otherwise during 2011, organizations are realizing the frailties of small inventories, just in time deliveries and single vendor partnerships. These procurement strategies may have looked good on paper at one time, but are now proving to have the potentialfor grave negative consequences, especially when the supply chain is cut by severe weather, strikes or other conditions.
"Organizations most vulnerable during disasters are those that insist on having just a few suppliers and resist automating their procurement process," said William Gindlesperger, chairman and chief executive officer of e-LYNXX Corporation. "You may have the best supplier in the world, but if itis underwater you are stuck without a supplier. You are left scrambling to find a supplier somewhere to deliver what you need, even if the quality doesn'tmeasure up to what you really expect."
Gindlesperger added that is where automated procurement technology fits in. With automated vendor selection technology, he said buyers are not limited to reliance on single sources ofsupply even while gaining the efficiencies and cost savings associated with single source partnerships. Buyers using automated vendor selection procurement obtain the best price from the best qualified supplier forthe specified product or service needed at the exact time required (with zero cost for inventory).