Preparing for Disruptions Through Early Detection

Unexpected events — ranging from extreme weather to product contamination — can easily disrupt businesses in today’s complex, interconnected global economy. The good news? A company can substantially increase its resilience by improving its ability to detect — and respond to — disruptions quickly.

In 2008, the Black Thunder mine in Wyoming’s Powder River Basin — the largest coal mining complex in the United States, owned by St. Louis, Missouri-based Arch Coal Inc. — planned to install a massive new conveyer tube to move coal to a silo for loading trains. When David Freeman, vice president of engineering at BNSF Railway Co. at the time, heard of the mine’s plans, he wanted to be sure the railroad had input. The mine planned to hire a 2.7-million-pound crane to hoist the 260-foot long, 500,000-pound conveyer tube 150 feet into the air and place it on pylons. The intricate installation process would suspend the tube over three tracks on which 80 BNSF and Union Pacific Railroad Co. trains traveled every day, carrying almost 1 million tons of coal to fuel power plants all across the Midwest and the East Coast. Overall, one-third of America’s transported coal would pass on the rails under that 260-foot long tube.

Freeman’s role was to review the mine’s plans and ensure close coordination to minimize service interruptions to BNSF’s customers. Thus, BNSF and Union Pacific halted traffic while the crane was scheduled to perform its delicate maneuver on a Saturday in May 2008. Freeman also sent two repair crews with four large tractors to the site to assist if needed. And he had a team on notice at BNSF’s headquarters in Fort Worth, Texas. BNSF’s readiness made a difference. At 12:30 p.m. that Saturday, Freeman got a phone call. “They dropped the tube on the tracks,” Freeman recalled a stunned onsite worker saying.1 The crane doing the heavy lifting had collapsed, and the giant tube had fallen directly across all three tracks.2 Three construction workers were injured in the incident.

Freeman and his team immediately flew to the site to help the mine with the response. Given the injuries, the U.S. Mine Safety and Health Administration (MSHA) needed to investigate the accident. The investigators would not arrive until three days later,3 and they had asked that nothing be moved at the site until they completed their investigation.

References

1. David L. Freeman (vice president of engineering, BNSF Railway), in discussion with the author, July 24, 2013.

2. D. Bleizeffer, “Three Injured, Two Critically, in Black Thunder Crane Accident,” Casper Star-Tribune, May 31, 2008.

3. David L. Freeman, discussion with the author.

4. Ibid.

5. For a discussion of such approaches, see Y. Sheffi, “The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage” (Cambridge, Massachusetts: MIT Press, 2005).

6. See “About,” n.d., http://skywarn.org; “Frequently Asked Questions,” June 1, 2015, www.aoml.noaa.gov; “Weather Radar: NWA Remote Sensing Committee,” January 16, 2015, www.nwas.org; and “NOAA Weather Stations: Determining Global Temperature,” n.d., www.noaa.gov.

7. A. Pawlowski, “UPS, FedEx Meteorologists Get Your Packages to You on Time,” December 20, 2012, www.today.com; and “UPS Meterologists Use the Latest Technology to Ensure On-Time Delivery,” n.d., http://thenewlogistics.ups.com.

8. NC4, “6/13/11-6/19/11 Significant Alerts by Category,” 2012, https://web.archive.org.

9. NC4, “NC4 Incident Monitoring Center Featured Incidents,” 2012, https://web.archive.org.

10. ESi Acquisition and SunGard, “Walgreens Gains Real-Time Awareness of More Than 8,000 Stores,” accessed November 3, 2013, http://www.esi911.com (site discontinued).

11. T. Berg, “Schneider Begins Installing Container- and Trailer-Tracking Devices,” June 28, 2013, www.automotive-fleet.com.

12. W.H. Tate and M.D. Abkowitz, “Emerging Technologies Applicable to Hazardous Materials Transportation Safety and Security,” Hazardous Materials Cooperative Research Program Report 4 (Washington, D.C.: Transportation Research Board, 2011); and J.C. Casto, “Web-Based Solution for Monitoring the Location, Security, and Status of Hazardous Material Movements” (presentation at the RFID Journal Live! Tenth Annual Conference and Exhibition, Orlando, Florida, April 3-5, 2012).

13. “What Is SenseAware?,” n.d., www.senseaware.com.

14. M. Kalfopoulos, “Panel Discussion” (presentation at the MIT Center for Transportation and Logistics Crossroads Conference, Cambridge, Massachusetts, March 26, 2009).

15. K. Philip, “Companies Exhibit Early Warning Signs of Trouble; Early Action May Stem Losses, Save Businesses,” Dec. 1, 2006, www.turnaround.org.

16. J. Ritchie and O. Akoto, “Spotting the Early Warning Signs of a Company’s Impending Financial Collapse,” white paper, LexisNexis and State of Flux, n.p., August 2012.

17. Philip, “Companies Exhibit Early Warning Signs.”

18. Company representative, “Panel Discussion” (presentation at the MIT Center for Transportation and Logistics’ Advancing Supply Chain Risk Management: Emerging Challenges and Strategies symposium, Cambridge, Massachusetts, October 10, 2012). Names of participants at MIT Center for Transportation and Logistics partner-only events are available only to partners.

19. T. Schick, “Panel Discussion” (presentation at the MIT Center for Transportation and Logistics Crossroads Conference, Cambridge, Massachusetts, March 26, 2009).

20. E. Rodricks, “Panel Discussion” (presentation at the MIT Center for Transportation and Logistics Crossroads Conference, Cambridge, Massachusetts, March 26, 2009).

21. Company representative, “Panel Discussion” (presentation at the MIT Center for Transportation and Logistics’ Advancing Supply Chain Risk Management: Emerging Challenges and Strategies symposium, Cambridge, Massachusetts, March 26, 2009). Names of participants at MIT Center for Transportation and Logistics partner-only events are available only to partners.

22. “IWAY or How We Support Our Suppliers and Their Suppliers,” February 24, 2014, http://lifeathome.ch/en.

23. “U.N. Panel Sets Limits for Chemical Melamine in Infant Milk Following 2008 China Scandal,” July 5, 2012, www.cbsnews.com.

24. Kelly Deng (sustainability compliance auditor, Ikea), in discussion with Alexis Bateman of the MIT Responsible Supply Chain Lab, December 12, 2013.

25. “Dioxin Scare Shuts Farms,” November 12, 2004, www.fwi.co.uk.

26. See B.M.J. van der Meulen and A.A. Freriks, “Millefeuille: The Emergence of a Multi-Layered Controls System in the European Food Sector,” Utrecht Law Review 2, no. 1 (June 2006): 156-176; “Dioxin Scare Shuts Farms,” November 12, 2004, www.fwi.co.uk; and “Dioxin in Kaolinitic Clay,” Food Safety Authority of Ireland News 6, no. 6 (November-December 2004).

27. Y. Wang, “More People Have Cell Phones Than Toilets, U.N. Study Shows,” March 25, 2013, http://newsfeed.time.com; “Digital, Social, and Mobile Worldwide in 2015,” January 21, 2015, http://wearesocial.net; and D. MacMillan, “Twitter Alerts U.S. Geological Survey to Philippines Quake,” August 31, 2012, www.bloomberg.com.

28. P. Marks, “Twitcident Searches Tweets to Help Emergency Services,” April 13, 2012, www.newscientist.com.

29. “Researching Technology for Mining Social Media in Times of Crises,” n.d., http://wis.ewi.tudelft.nl.

30. D. Strom, “Listen Up! Dell Lends Its Ear to Social Media,” February 23, 2011, www.cmo.com; “How Dell Has Reinvented Itself Thanks to Social Media,” blog post, May 15, 2012, http://socialaxis.wordpress.com; and L. Menchaca, “Dell’s Next Step: The Social Media Listening Command Center,” December 8, 2010, http://en.community.dell.com.

31. The White House, Office of the Press Secretary, “Proclamation Address Market Disruption From Imports of Certain Passenger Vehicle and Light Truck Tires,” September 11, 2009, whitehouse.gov; and Associated Press, “China Announces Another Massive Cut in Rare Earth Exports,” December 28, 2011, www.businessinsider.com.

32. See “Costs Associated With Regulatory Risks,” December 31, 2008, http://erm.ncsu.edu.

33. N. Luu, “Business Continuity Management and Crisis Management” (presentation at the MIT Center for Transportation and Logistics Advancing Supply Chain Risk Management: Emerging Challenges and Strategies Conference, Cambridge, Massachusetts, Oct. 10, 2012).

34. See “Conflict Materials Reporting Template,” n.d., www.conflictfreesourcing.org.

35. Bindiya Vikal (CEO and founder, Resilinc), in discussion with the author, December 26, 2013.

36. Y. Sheffi, B. Vakil, and T. Griffin, “New Software Tools to Manage Risk and Disruptions: Part II,” March 29, 2012, www.scmr.com.

37. Ibid.

38. Y. Sheffi, B. Vakil, and T. Griffin, “Risks and Disruptions: New Software Tools,” unpublished ms.

39. N. Luu, “Business Continuity Management and Crisis Management.”

40. Ibid.

41. C. Bolgar, “Boosting Protection,” May 10, 2010, www.supplychainriskinsights.com.

42. D. Biederman, “‘Control Towers’ Gain Scale Among 3PLs,” Journal of Commerce, June 10, 2013; and “Global Supply Chain Control Towers: Achieving End-to-End Supply Chain Visibility,” June 8, 2011, www.capgemini.com.

43. Stella Constantatos (global sustainability manager for supply chain, Unilever), in discussion with the author, February 20, 2013.

44. G. Johnsen, “Your Global Supply Chain Control Tower Has a Memory,” February 25, 2010, www.scdigest.com; and R. Strollo, “The Rise of Global Control Towers,” June 1, 2014, www.logasiamag.com.

45. “Order Out of Chaos: The Case for Building a Frontline Supply Chain Control Tower,” 2011, www.e2open.com.

46. “Versik Analytics Fact Sheet,” n.d., www.verisk.com.

47. See Storm Prediction Center, NOAA/National Weather Service, “April 13, 2012 0600 UTC Day 2 Convective Outlook,” April 13, 2012, www.spc.noaa.gov; OUN Webmaster, “The April 13, 2012 Norman, Oklahoma Tornado,” n.d., www.srh.noaa.gov; and “Advanced, Site-Specific Warnings Aid Preparations,” n.d., http://enterprisesolutions.accuweather.com.

1 Comment On: Preparing for Disruptions Through Early Detection

  • Rabindranath Bhattacharya | November 2, 2015

    Dr. Rabindranath Bhattacharya, Visiting Professor

    I congratulate the author for this wonderful article on Supply chain disruptions through early detections which is so relevant in today’s world.

    Detection of an impending disaster/disruption has always been a challenging job for practitioners and success lies in how early this could be detected so that you can be prepared for taking actions on time to minimize the effect of the same. There are instances when companies have gone out of business since they were not serious about the disaster which was likely to hit their supplier and took no action till everything went out of control by the intensity of impact.
    Author rightly pointed out that ” the earliest companies to detect the problem have a competitive advantage over less-vigilant competitors in securing limited remaining global supplies or capacity”. This competitive advantage is what all organisations are striving for and hence the importance of this topic.

    Author opined that “companies such as Cisco determine the locations of their key (Tier 1) suppliers to assess supplier risks. Such location data then feeds into the incident-monitoring systems that the companies use”. But I feel time has come when organisation should take some pre emptive actions before selecting their alternate Tier I suppliers based on various analytical tools like AHP, TOPSIS etc. incorporating all the data for the risk as well as other factors related to supplier selection. I would like to understand from the author whether this is done by anybody.

    Disruption of supply chain can also happen because of price rise and a responsible supplier can come to your rescue also. I remember about a Japanese company supplying steel tube to us in India who forewarned me about appreciable price increase one year before the implementation. I was able to shift comfortably the business to a Chinese company with their help since I was not in a position to accept the steep rise as demanded by the Japanese company. I was taken aback!!

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