Design of reliable supply chains

Abstract

Natural disasters, man made accidents or acts of terrorism lead to disruptions in the sourcing, production and distribution of goods and services. The foremost example is of course the terrorist attack of 9/11, which caused billions of dollars worth of damage as the U.S. shut its borders resulting in widespread havoc, especially in industries supplied by air transportation. It has often been seen that the overcompensating government responses to such acts create much more loss, for a longer term than the acts themselves. Delays due to closure of ports and airports, more stringent and time consuming security checks causing longer lead times, a rush to set up duplicative facilities/sources to guard against future attacks, huge insurance premiums and higher costs for emergency sourcing of raw materials are some of the added problems faced by firms. This directly affects the working of several companies, especially ones working on JIT processes. After 9/11, Ford Motor Co., for example was forced to let some of its assembly lines stay idle as trucks full of auto components were stuck at the Canadian and Mexican border, while several others such as Toyota came dangerously near to expending all of their inventories for JIT sourced components and shutting their assembly lines [1]. For Indian companies working in the pharmaceutical, apparel, automotive parts or retail sectors and seeking to target more of the foreign market, integrating such issues into their operations is longer be a matter of choice.