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Supply Chain Risk – Taking Care Of The Basics

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It Starts With You

In the recent piece on the Overview of Supply Chain Risk, I listed events that could both delay and disrupt the delivery of product. These events typically result in hits to a company’s bottom line – let’s call our company Stuff-In-A-Box for the sake of this discussion. Stuff-In-A-Box has been seeing some significant cost increases and revenue losses due to factors they believe are outside of their control. Just how much is outside their control?

Back To Basics

What I did not make clear in the earlier post is that Stuff-In-A-Box is not just the operator of their supply chain, but is also a crucial link in that chain. Their location, facility, local transportation options, systems, processes, and people are all components in the Stuff-In-A-Box supply chain link. The quality of each of these elements is directly related to the quality and success of their supply chain.

A Clean Well-Lighted Place

Like the broken-window theory of crime deterrence, having a clean, well-organized warehouse sends a message that the business takes pride in their operation and in their products. Carefully defined and controlled pallet locations[1] give the order pickers confidence that if they go to a specific location to find a specific part, they will be successful.

You Can’t Get There From Here

Access to well-regarded, reliable transportation is another important element of the Stuff-In-A-Box supply chain. Despite individual experiences, companies like UPS and FedEx are largely trusted and don’t require any vetting. However, in the LTL (Less Than Truckload) world, there are many small local operations that may not be as reliable or care about safety as much as they should.[2] Check references and track records with regard to on-time deliveries, damage, restitution, and vehicle maintenance.

Parts Are Parts, Unless You Can’t Find Them

Along with a well-defined warehouse location structure, the item profiles need to be well-defined as well. Whether picking by part number or via a bar-code scan, the descriptions are an important double-check and as such need to be formatted so that the most critical information falls at the beginning (i.e. Manual, Hard-drive, Box etc.).  In addition to good item profiles, having an active cycle count program is also very important – inventory accuracy above 95% will minimize the frequency of high-cost component orders and production delays.

 Say What You Do And Do What You Say

Think of an organized warehouse and well-defined item profiles as two legs of a three-legged stool. Without the third leg – documented procedures and trained employees – the stool would not be very functional. Documented processes and employees trained to follow those processes will ensure consistent, repeatable outcomes. Further, the creation of a quality management program will guarantee that processes continue to be followed over time, but will also determine opportunities for improvement.


[1] I worked with a company in the early 1990’s that did not have defined pallet locations. The pickers would walk the aisles until they found (or didn’t find) the parts they were looking for.

[2] Another scary story. The June 15, 2015 issue of the Express reported on problems with refugees at the French port of Calais – “Freight industry experts have warned the crisis has brought Britain’s food supply chain close to collapse, with almost £2m of fresh produce being thrown away each month after becoming contaminated by migrants who break into the back of lorries.” To read the full article, click here.

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