|
Have you considered that flooding in Ayudhaya, Chokchai, and Bangkok, Thailand could impact your business?
Think of all the natural disasters the world has experienced in 2010 and 2011. How many events on these lists do you remember? How many affected your business?
2010: The Haiti earthquake, European floods, West Virginia coal mine explosion, Iceland volcano eruption, Nashville flood, BP oil spill in the Gulf of Mexico, Guatemalan hurricane, Western wild fires, Pakistani floods (4 million homeless), Chilean miners trapped for two months, European snow paralyzes the region
2011: Australian floods, Brazilian floods, New Zealand earthquake, massive earthquake and tsunami in Japan, Japanese nuclear plant disaster, Iceland volcano eruption, tornadoes through the South and in Joplin, Chile volcano, China floods, Indonesian volcano, intense heat in US and Canada, Texas drought, hurricanes and flooding up the East Coast, Nepal earthquake, Thailand flooding, Turkey earthquake
This list doesn’t even include air crashes, sunken ships, drought, famine, and disease. And, then there are strikes, work stoppages, terror attacks, and war—not to mention the turbulent world economy.
For a moment, put aside the human toll, suffering and sorrow these disasters have caused. Think about what natural disasters mean to your business. The Nashville flood directly impacted many of our local businesses and citizens. However, disasters on the other side of the world have also.
Drought, floods, and disease determine if we have cocoa, coffee, and cotton—and how much they will cost if we can get them. You get the point.
How many raw materials and manufactured products do you use or sell in your business? Where do they come from? Further, most products do not come from a single source.
As a business owner, educate yourself about the products you sell and the supply chain and logistics that put those products in your business. A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer.
In one sense, you are a customer for other businesses in the supply chain. However, you are also part of the supply chain that prepares a product or service for the end user/customer. So, it is essential that you know the components of the supply chains for your business and where and how you fit in each.
First, know what is happening in the world—YOUR world and THE world. Politics, weather, and stuff affect your business.
Next, know the lead time and cost of the materials and products vital to your business. If any disruption occurs, what is your contingency plan? What will you need to do to deliver what you have promised to your customers at the price they expect or can afford? Can you use something else? Can you get it somewhere else?
In a world that should know the importance of redundancy, tech manufacturers and suppliers are having to explain why heavy flooding in Thailand is significantly impacting their ability “to meet customer demand the rest of the year.” Those words mean very little product is being manufactured in Thailand for computer hard drives, data storage equipment, and fiber optic products.
One newsday.com article this week named 18 US companies that will experience limited product supply, increased costs, and decreased corporate profits through second quarter 2012—because of a flood in a specific region in one country. If you sell telephones or personal computers, did you realize that your business was dependent on the stability and welfare of Bangkok, Thailand?
You don’t have a business without raw materials, products, or services. Information and understanding of those supply and logistical chains are your future. Knowing your business means knowing your chains.
We can count on death and taxes. We also can count on natural disasters. As a business owner, take the advice of the Boy Scouts: Be Prepared!
Arnelle Adcock is a partner and president of Brentwood-based Clover Management Group — a team of seasoned professionals who help business owners. You can reach her at 615-900-0777, aadcock@clovermg.com, or www.clovermg.com.
Recent Business Matters columns:
|
Email
Print
