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The Criticality Of Effective Supply Chain Management In Times Of Disaster

Mon, 11/25/2013 - 9:29am
Jesus Carlos P. Villaseñor, CEO of TransProcure and ADR Intl
In the wake of tragedies like the devastation caused by Yolanda, a key aspect of recovery is supply chain management - acquiring and delivering the water, tents, medicine, body bags, blankets, and clothes so desperately needed. 
 
And later, after the immediate needs have been met and the dead buried, the contracting of many services from engineering to construction to electricity, water and communications reestablishment and, still later, to rebuild the infrastructure, schools, hospitals, and homes. During these times, the importance of supply chain management becomes crystal clear.

Rapid response is the key phrase to describe the need in the early stages of any disaster recovery. The pleas for help days after the event is a heart wrenching sign that work needs to be done in this area.

The Stephenson Disaster Management Institute (SDMI) in Louisiana, USA, after Hurricane Gustav in 2008, established the Business Emergency Operations Center (BEOC) in Louisiana which coordinates the participation and activities of businesses, non-profit organizations and volunteer organizations in disaster management efforts through public-private partnerships (PPPs).

They have offered to work with the Procurement and Supply Institute of Asia (PASIA) to bring these best practices -- especially in procurement, supply and logistics -- to the Philippines. They will present their researched and tested methods of organizing rapid response through disciplined collaboration from a wide array of responders from government to volunteers and private business to non-profits as part of a special track from 11 a.m. to 3 p.m. for C-level executives during the PASIAWorld Procurement and Supply Management Conference at the Marriott Hotel on Nov. 21.

Here in the Philippines, it is the right time to use their knowledge to develop our own PPPs for this purpose. For there will be future disasters with which we will have to deal. 

The recent MOA that was signed between the Management Association of the Philippines (MAP) and PASIA provides the opportunity for business leaders to attend and hear SDMI share their knowledge, which could direct future discussions and actions for members and their organizations.

Economic "storms" are also a challenge to competitiveness.

A rapidly emerging opportunity for businesses in Asia is to be found in the growing awareness of CEOs of the untapped value residing in their procurement and supply management to help them to compete.

CEOs are seeing that professional procurement and supply management can reduce risk, enhance sustainability, product development, and even innovation. No longer is tough negotiating seen as the only competency of procurement professionals.

Competing successfully in an ASEAN market that is economically integrated, and in Asia generally, which is growing faster than ever, is a challenge in which procurement and supply management can play a strategic and advantageous role.

As I travel throughout Asia and the Middle East speaking and promoting the enhancement of the procurement and supply management profession, I am encouraged by the number of C-level executives who have awakened to the opportunity to challenge their professionals to deliver so much more than reduced costs.

Reputational risk is one area that is keeping CEOs awake at night. A single wayward supplier can wreak havoc on a company’s reputation. Just ask Mattel or Apple. 

As the world demands more from companies with regard to social and environmental responsibility, the role of the procurement professional in sourcing trusted suppliers is increasing.

How will companies that failed to respond adequately to the needs of the victims of Yolanda be viewed by their customers, community and the world?

The Global Reporting Initiative (GRI) which developed training and support in Global Sustainability Reporting and which is being used by many organizations worldwide, recently released its GRI 4 standards. The changes to the new version bring focus to measurements that impact procurement and supply management. This is in recognition of the capability of procurement and supply management to influence and add value to the sustainability efforts of organizations.

The awful disasters that have struck the Philippines in the last few months, the devastating tsunami in Japan, and general violent weather effects have caused Supply Management to plan for continuity of supply down to the third tier of suppliers. It does not help to have a Disaster Plan in place for first tier suppliers only, as these suppliers might not have an effective Disaster Plan affecting their suppliers and consequently they might be unable to supply as required. Discontinuity of supply is one of the top risks to business as quoted by CFOs.

The ability to reduce costs has always been the single value ascribed to procurement professionals. Starting more than a decade ago, this has changed considerably and the competencies of strategic procurement and category management have expanded their value considerably. Strategic sourcing looks at best value procurement taking into account the cost, market conditions, supply factors, logistics and supplier attributes, among others.

The PASIA C-Level Executive Forum embedded in this week’s Conference, and open to all C-level executives and their supply chain team, will provide an opportunity for these executives to meet and learn from experts from around the world in an exclusive forum. The focus is on procurement and supply management for competitive advantage.

Listen to:

• Col. Joseph Booth and Col. Pat Santos of SDMI, USA

• Enrique Torres, Senior Manager, GRI, Netherlands

• Chris Thakray, Global Sourcing and Risk Management, GE Capital, USA

• Todd Snelgrove, Global Manager, Value SKF, USA

• Brett Beattie, Group Procurement Manager, Veolia Environment, Australia

• Albert Taras, Managing Partner, TCG Consulting, USA

• Robin Jackson, CEO and President, ADR International, Europe and USA
 
We have to harness the power of professional supply chain managers to help in disaster recovery and in helping our nation compete. Research shows that the maturity of a country’s procurement and supply practices correlates directly with the competitiveness of the country. These are the reasons why C-level executives should participate in the forum and conference this week. For further information, e-mailinfo@pasia.org or call +63 2 844-2680.
 

This article initially appeared on www.adr-international.com.

(The author is Chair of the Procurement and Supply Chain Committee of the MAP, Chair of PASIA, Executive Board member of the International Federation of Purchasing & Supply Chain Management, and the CEO of TransProcure and ADR Intl -- ASEAN Region. Send feedback to charlie.villasenor@transprocure.com. For previous articles, visitwww.map.org.ph)
 
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