Catastrophic Supply Chain Disasters made worse by laziness

Catastrophic supply chain disasters

Mike MortsonGlobal thought leader in supply chain, change management, procurement, management and edtech, Mike Mortson, fears that supply chain leaders are becoming lazy. By this, he explains, he doesn’t mean that they are lazy in terms of getting their day-to-day tasks done, but in making the strategic improvements necessary to create more robust and resilient supply chains. Read on to appreciate how many disasters were made so much worse by a lack of preparation or principles … or both.

As a case in point, with the end of the global Coronavirus pandemic, far too many companies and their leaders in particular, have forgotten the level of devastation caused by the pandemic and have reverted to their age-old ways of doing things.

So to jostle these leaders from their inertia, I’ve compiled this list of 10 catastrophic man-made Supply Chain disasters.

1. The Deepwater Horizon Oil Spill (2010)

One of the worst environmental disasters in history, the Deepwater Horizon oil spill occurred due to the explosion of an offshore drilling rig in the Gulf of Mexico. The incident caused massive oil leakage, leading to devastating environmental damage and disrupting the supply chain of the fishing, tourism and shipping industries in the region.

The result was 205.8 million gallons of oil and 225,000 tons of methane spilled into the Gulf of Mexico. Fish and fishing across 88,000 square miles of water were impacted along with 82,000 birds, 6000 sea turtles, and 26,000 marine mammals. Thousands of jobs were impacted along with billions of dollars of economic impact.

With residual oil remaining in the water the disaster emphasised the need for stringent safety measures and contingency plans to prevent and manage such incidents.

2. Rana Plaza Factory Collapse (2013)

The collapse of the Rana Plaza garment factory in Bangladesh resulted in the loss of over 1,100 lives. The tragedy exposed the grim reality of poor working conditions and safety standards in the global garment supply chain. And it exposed the lack of care or concern of companies and their sourcing organisations for the working conditions of their suppliers and their employees.

It highlighted the ethical corporate social responsibility of companies to ensure safe working conditions and the importance of transparency and accountability throughout the supply chain amongst all tiers of their suppliers.

3. Volkswagen Emissions Scandal (2015)

Volkswagen’s deliberate manipulation of emission tests revealed a systemic failure in the automotive supply chain. The scandal led to substantial financial losses, legal consequences and a decline in consumer trust.The economic and reputational impacts were not confined to VW alone, as their suppliers were impacted as well.

It underscored the significance of ethical practices, integrity and regulatory compliance within supply chains, emphasising the need for transparency and monitoring mechanisms.

4. Boeing 737 Max Crisis (2018)

Following two fatal crashes attributed to a software malfunction, the Boeing 737 Max crisis unfolded. The incident resulted in the grounding of the entire 737 Max fleet and significant disruptions in the aviation industry’s supply chain.

Leadership issues, sourcing decisions, design changes, cost cutting decisions, insufficient supplier management and testing, and other factors contributed to the disastrous situation.

The crisis highlighted the criticality of effective quality control, proper training, and thorough testing in the development and deployment of complex technologies.

5. Colonial Pipeline Ransomware Attack (2021)

The ransomware attack on Colonial Pipeline, one of the largest fuel pipelines in the United States, disrupted fuel supply of almost 50% to the east coast of the US, causing panic buying and fuel shortages.

The incident exposed the vulnerability of critical infrastructure and the need for robust cybersecurity measures in an increasingly digitised supply chain landscape.

6. Tianjin Port Explosion (2015)

A series of explosions at the Tianjin Port in China (3rd largest in the world by container volume) caused significant damage to the port infrastructure, disrupting global supply chains, along with loss of life. Tianjin, home to 12 million people, is a critical Chinese logistics and manufacturing hub.

The incident emphasised the importance of risk management, contingency planning, and the need for enhanced safety protocols and regulations in the handling and storage of hazardous materials.

7. Foxconn Suicides (2010)

A series of suicides at Foxconn, a major supplier for companies like Apple, raised concerns about labour conditions in the electronics industry. Described as a labour camp with abuses in the working conditions and demands of employees, both Foxconn and their customers, most notably Apple, were forced to take action.

The incidents highlighted the need for improved worker welfare and supply chain transparency, prompting companies to reassess their, and their supplier’s, manufacturing practices and labour standards. This also highlighted the need for companies to do this proactively, instead of taking reactive steps.

8. West Coast Port Labour Dispute (2014-15)

The labour dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association at 30 West Coast ports in the United States resulted in severe congestion and disruptions in the supply chain. A total of 14,000 longshoremen impacted the US economy to the tune of $2 billion per day.

The prolonged dispute impacted various industries, including retail, manufacturing and agriculture, causing delays and economic losses.

9. Galaxy Note 7 Battery Explosions (2016)

Samsung’s Galaxy Note 7 smartphone experienced widespread battery explosions, leading to a global recall of the product and significant damage to Samsung’s reputation. They were forced to stop production and sales in this highly competitive marketplace.

With the majority of these batteries coming from one supplier, Samsung had to quickly find and qualify alternative suppliers, which also experienced battery problems as these products were rushed to market. Manufacturing and design issues were to blame.

10. KFC (2018)

How does the world’s largest chicken franchise run out of chicken? In the UK the company was closing half of its stores due to a lack of supply. KFC switched from a 3PL supplier with six distribution centres to a 3PL supplier with one location. The problems quickly surfaced.

The lack of planning and foresight, and understanding of their supply chain, logistics and lead times and delivery times was clearly at issue.

Conclusion

There are endless examples of Supply Chain disasters. And not just from natural events, but from man-made events. There are lessons to be learned by any and every company, big or small, from each of these examples.

Companies cannot rest on their laurels and be lazy. If they do, the next of the catastrophic man-made Supply Chain disasters is heading your way. None of the companies saw the above events coming, even though in most cases they should have. No one is immune.

Which catastrophic man-made Supply Chain disasters would you add to this list?

Copyright © Mortson Enterprises Inc. All Rights Reserved.
Originally published on May 16, 2023.

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