Earthquakes, hurricanes and Steve Jobs - unexpected events...should be expected

So in the past week two regional events and one national (really international) event have captured the headlines. For those of us of that live or have acquaintances on the East Coast, we had an earthquake and a hurricane - those are the regional events I mentioned. The national event was the announcement that Steve Jobs was stepping down as CEO of Apple. So what do these events have to do with one another? Or with supply chain?

These events represent a fundamental aspect of the extended supply chain - out of plan events. Granted one might argue that Apple had know that Jobs' health was not good and that he was destined to having to step down at some point, but it was still a shock to the system. An earthquake, that cannot be predicted, a "bolt out of the blue" that can have different degrees on impact. A hurricane, well we can predict the path, model the damage and prepare for the results. But that requires a certain level of modeling and guess work, what happens when it does not go according to plan, or when some infrastructure survives while others fail?

Just as with these events, it is the speed at which the systems can recover that determines how damaging the impact will be. Apple had visibility into the reality of Steve Jobs' health, they could implement a plan rapidly, ensure that Apple, its employees and customers would not see too drastic an impact on the business. With Hurricane Irene, the East Coast cities and states were able to prepare and respond once the event occurred - some better than others. The quicker the response, the faster cities and states get back to "business as usual." Finally with the earthquake, there was no warning, who would expect an earthquake on the East Coast? While the damage appeared to have been minimal, what had it been more severe? How would cities like New York and Boston reacted and been able to resume business as usual?

What this means for the extended supply chain is you need to think about out of plan events in three buckets:

• Events you know will happen, ones that you can plan for - like Steve Jobs retiring. You might know a product is going to be replaced, how do you plan for the new product introduction while sunsetting the old? You might not know the exact date, but you know it is going to happen.
• External events that you will know will occur (hurricane season) but have no control over. Yet you can prepare some contingency plans for - product recalls or design failures, these are always potential for these to strike, but you can plan for how to handle them if they arise. Or a potential dock worker strike in Long Beach that could cut off your ship bound supply. Much like a hurricane you know that they will occur, just not always the severity.
• Bolt from the Blue events - an earthquake, the SARS outbreak or a volcano. On smaller scale a computer virus attack or power outage - while you can simulate these events, you never know when they will strike or impact your extended supply chain.

With all these events what is key to rapid recovery is real time visibility, your need to be able to see through your extended supply chain to identify where the event is impacting your business and more importantly how to get to the root cause, and therefore implement a solution. The key is - the sooner you can identify the problem the sooner you can recover.

What do you think about the relationship between visibility and recovery? Let us have that conversation at Progress Revolution.