Risk Management In Materials Handling
by: Kristen Pryor on Fri, 10 Sep 2010 at: 12:25 PM Go to: Previous Article Next Article
We tend to take the chain of supplies for granted if things are going smoothly. It's only if something goes wrong that we learn how interconnected and interdependent we all are. In a global marketplace, a war or natural disaster in one isolated area can become a break in the supply chain that affects businesses worldwide. Those involved in materials handling at any level can learn valuable lessons from these large scale disruptions.
How could a natural disaster like the volcano eruption in Iceland affect a business owner in Illinois? You manage a medium sized warehouse and there is nothing you need for your business that comes from overseas. You feel sympathetic towards the millions of people who were affected if the eruption occurred, but other than that, it didn't touch your life or business.
The situation, of course, was far different in Europe, where almost all the major airports were shut down for weeks following the eruption of the volcano in Iceland. Thousands of businesses were crippled by that occurrence. A few businesses were prepared, though, even for such an unlikely occurrence. These were the businesses that already had a "Plan B."
We all need a "Plan B" and even more. While it is not likely that a volcano is going to erupt in Kansas any time soon, there could be any number of setbacks that could have just as devastating consequences for your business. Your faithful forklift breaks down just if it is needed the most. Some parts from China are held up at the docks in San Pedro while a labor dispute is being resolved.
"If something can go wrong," says Murphy's Law, "it will go wrong." Risk management is the act of realizing that things will go wrong and taking steps to minimize the consequences of those risks. Just because your forklift has been running smoothly for the past five years doesn't mean that it will run smoothly forever. If it is old, think about replacing it and by all means, have it serviced and inspected regularly.
If you rely on a steady supply of parts for your manufacturing plant or goods for storage in your warehouse, ask yourself what would happen to your business if there was a break in your supply chain. Do you have another supplier you could turn to? Do you have enough parts to see you through, in case a delivery was delayed?
The most successful firms often got that way because they had solutions to supply chain disruptions if others did not. They had risk management strategies in place for materials handling disruptions if other firms did not. Take a little time to study their strategies and implement your own. It's a lot better to do that than to go on hoping for the best.
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