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Supply-Chain Adjustments Key After Attacks

After the events of Sept. 11, many companies realized that global sourcing, just-in-time lean inventory, and a wartime supply chain might be incompatible.

InformationWeek Staff

November 29, 2001

3 Min Read

Getting parts and materials from less-expensive overseas suppliers has become an increasingly important sourcing and supply-chain strategy in the past few years. With nearly unfettered air and ocean freight and smart-logistics technologies to manage shipments, companies often thought of overseas shipments as reliable as deliveries from within the United States.

But the events of Sept. 11 revealed flaws in that strategy. Many companies realized that global sourcing, just-in-time lean inventory, and a wartime supply chain might be incompatible.

An InformationWeek Research survey of 100 business-technology professionals in November signals a change in the overseas sourcing strategy for a large percentage of those surveyed. Prior to the attacks, foreign suppliers accounted for nearly a fifth of the parts and materials used by those interviewed. Now, although 96% of respondents say their overseas suppliers are reliable, a quarter report that because of disruptions in the supply chain, they're focusing on sourcing more of their strategic parts and materials from U.S. suppliers or are considering buying more from U.S. suppliers.

The survey indicates another significant change in the lean-inventory models that some companies use. More than 20% of those interviewed say they're increasing their stockpile of parts and materials, a strategy that previously might have been considered too risky. Following the attacks, however, many companies began increasing their stockpile, sometimes called a "float," to ensure that production parts would be on hand.

Before the attacks, stockpiling more than a few days of parts ran counter to the smartest thinking about the way to run a supply chain. Stockpiling led to unnecessary inventory management, and warehousing and transportation expenses. Companies that maintained more than a minimum inventory ran the risk that demand could drop suddenly and leftover parts would mean unrecovered expenses.

How have the events of Sept. 11 affected your supply-chain partnering? Let us know at the address below.

Steve Konicki
Senior Writer
[email protected]

Diverse Requests
InformationWeek Research's supply-chain survey shows that service agreements are increasingly undergoing scrutiny. And 34% of the 100 business-technology professionals polled are renegotiating their service contracts or are considering doing so. Of those that are re-evaluating their service contracts, more than 80% want increased IT security in the wake of Sept. 11, more than 60% want more concise contingency plans, nearly 60% are looking for better system integration, and half want improved data recovery.

It's clear that the events of Sept. 11 are causing IT managers and the businesses they help manage to rethink some basic concepts about what will work--and won't work--in a very changed business climate. These events also are prompting companies to re-evaluate the best ways to safeguard the data that is the lifeblood of their businesses. Top of the Page

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