"Unforeseen events occur more frequently in the very long global supply chains, as shown by the following examples:
• In July 2006, 4,700 Mazdas were trapped in a ship listing on its side off Alaska's Aleutian Islands. As a result, inventory stood at 21 days of sales (DOS), versus the target of 65 DOS, creating a severe availability problem. (That's $103 million in cars lost.)
• In two separate incidents in 1992 and 2002, 113,000 Nike sneakers were lost and are still washing up all over beaches in the Pacific Northwest.
• Ten thousand containers fall off ships annually. Although this is less than 1 per cent of total container volume, the 1 per cent lost can be enormously disruptive if it's your 'efficient' supply chain.
• In 2007, there were 275 pirate attacks on commercial shipping, which increased through 2009.
"Because of the huge impact on the corporation, supply chain change management plans have to include thorough risk analysis. Plans must include supply chain risks, probability and impact assessments, and risk-mitigation plans. Executing this process at the beginning of supply chain projects can avoid much pain later."
('The New Supply Chain Agenda: The 5 steps that drive real value,' by Reuben E. Slone, J. Paul Dittmann, and John T. Mentzer, p. 158, Harvard)
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