INSIGHT's Jeff Karrenbauer Discusses New Types of Supply Chain Risk --
Political Unrest, Climate Change, Sudden Demand Change & Poor
Supply Chain Vulnerability Modeling & Analysis Mitigates Supply Chain
MANASSAS, VA -- (Marketwire) -- 03/05/13 -- INSIGHT, Inc., a top
international provider of supply chain planning solutions for the
world's foremost companies, believes that other supply chain risks
exist besides natural disasters and premeditated attacks by
intelligent adversaries. Dr. Jeff Karrenbauer, president and
co-founder of INSIGHT, has been evangelizing for years the need for
supply chain vulnerability analysis to mitigate risk in supply
chains. He sees supply chain disruptions coming from a variety of
additional sources, such as political unrest, climate change, sudden
demand changes, and misguided investments in technology.
Supply chain risk may result from political and economic tensions
such as those between China and Japan, where both countries lay claim
to a group of uninhabited, fishing islands located in the East China
Sea. Bob Ferrari of The Ferrari Group sees this manifesting in the
supply chains of Japan's automotive and consumer electronics supply
chains. Many factories with Japanese brand interests were forced to
close their China factories for several days this past fall as
anti-Japanese protests caused a concern for production worker safety.
Says Mr. Ferrari, "The reminders of external supply chain risk come
in many dimensions and now there is a concrete example of political
tension between countries as evidence."
Seventy percent of companies surveyed by the Carbon Disclosure
Project and Accenture believe that climate change will significantly
affect their company revenues because it presents a physical risk to
their operations. Climate change presents risks associated with
extreme weather and can have adverse effects on company operations.
Other companies have invested in technology that failed and caused
supply chain disruptions, which led to lost revenues, bankruptcy, and
poor customer reputation, such as:
-- Foxmeyer Drug filed bankruptcy after new order management and
distribution systems didn't work and fulfillment cost targets were
-- General Motors Corp. invested billions
in robot technology that did
-- Online grocer, Web Van, invested in automated warehouses that drained
capital, causing the company to file bankruptcy within months.
-- Hershey Foods' order management and warehouse implementation issues
caused Halloween shipments to be delayed; the company lost $150
million in revenue.
-- Cisco was caught with massive inventory as demand slowed and there was
no visibility program in place, resulting in a $2.2 billion inventory
-- Aris Isotoner, a division of Sara Lee, moved production from Manila to
even lower-cost countries; sales decreased 50 percent and the unit was
sold to Totes.
According to a recent survey by Deloitte, "53 percent of the 600
executives that participated said that supply chain disruptions have
become more costly over the last three years, and 48 percent said
that such events had become more frequent during that period. 'Margin
erosion' was cited by 53 percent of respondents as one of their two
most costly byproducts of supply chain disruptions. That was followed
by 'sudden demand change,' cited by 40 percent. The latter problem
reflected supply chain challenges associated with growing customer
expectations, short product cycles, and emerging competitive
INSIGHT suggests a continuous supply chain design process can help
companies succeed when faced with the unexpected. Comprehensive, long
range supply chain planning can minimize financial impacts, preserve
customer relations, and maintain optimal supply chain operations in
the face of interruptions. Every company should add to these plans a
set of "what-if" contingencies that could disrupt operations and
develop, in advance, strategies to mitigate both risk and
About INSIGHT, Inc.
INSIGHT, Inc. provides optimization-based supply chain analytics and
consulting services to meet today's dynamic business challenges.
Founded by supply chain and operations research experts in 1978 to
apply world-class technology with intelligence and rigor to decision
making, INSIGHT solves the complex supply chain strategic, tactical,
and financial planning management issues of the world's foremost
companies, including many of the Fortune 100 firms, such as
ExxonMobil, Nestle, and BASF. Our software and services help firms
minimize costs, maximize profits, free up capital, streamline
operations, and increase customer service levels. For more
information, please visit us on the Web at
For more information, please contact:
(770) 642-2080 x 214
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