Exercise: Managing a supply chain disruption

- At this very moment, there are a thousand things happening around the world that have the potential to disrupt your supply chain. Do you know how to respond when something goes wrong? The truth is responding to a supply chain disruption is usually a project. So let's practice using the direct framework to map out a response to a supply chain disruption. Two trees Olive Oil just learned that there's a wildfire very near to their supplier for glass bottles. If that factory burns down then they won't have any bottles to put their oil into. What would you do? If you have access to the course exercise files? You can use the direct worksheet as a template. Otherwise, you can do this exercise on a blank sheet of paper. Look at each element of the direct framework and think about what questions you would need to ask and what tools you could use to ensure that each element is addressed. Define the objective, investigate the options. Resolve to a course of action, execute the plan, change over to the new solution, and transition the people. Remember, we need to respond to the possibility that our bottle suppliers factory will burn down. Don't worry about making this perfect. Just do your best, and once you've completed the exercise, come back and I'll share some of my suggestions. (upbeat music) Okay, we need to decide what to do if our bottle suppliers factory burdens down. First, we need to define the objective. In this case, we want to make sure that we have access to enough bottles to keep our supply chain running. Next, we need to investigate options. The first thing I would check is to see how many bottles we already have in inventory. That will tell us how soon we'll be in trouble if our supplier's factory does burn down. Then I'd want to see if there are any bottles in transit or if there are any that we can rescue from our supplier's facility before the situation gets worse. And finally, I want to have a list of other suppliers that we could turn to if our supplier's facility does burn down. For each of these alternate suppliers we need to know their location, how quickly they'd be able to fill an order, and how much they charge. Then we need to resolve to a course of action. We probably won't do anything until the situation gets worse but a quick response is essential in this case. So we need to know who has the authority to make decisions. A RACI matrix can be especially useful to make sure that everyone understands what they need to be focused on and what their role is. Execution needs to happen quickly during a supply chain disruption. We sometimes need to make decisions even when we don't have all of the information that we'd want. It often helps to set up a disruption response center so that team members know where to provide updates and report issues that emerge. If the fire is contained then we probably won't need to take any action. But if the building burdens down, then we need to move quickly to find another source for bottles. When we're recovering from a disruption, the change is actually about returning to normal operations. How do we get out of crisis mode and get all of our supply chain processes working smoothly again? So if the bottle factory burns down then the change is focused on onboarding a new supplier and the transition is about making sure that we take care of our people, that everyone is working safely, and that they have the support they need to do their jobs well. It's important to remember that supply chain disruptions can sometimes affect our employees and their families before our employees can help us deal with the impacts to our business. They first have to take care of their homes and their families. Supply chain disruptions happen all the time and they're hard to predict. Using the direct framework can be an easy way to think through the steps that you need to take and the factors you need to consider in order to respond to a disruption effectively.