Risk Management In Materials Handling

When things are going well, we don't think much about our supply chain

. We order things and they arrive. However, when there is a break in the chain of supplies, we learn the hard way just how dependent we all are on those vital links. A natural disaster on the other side of the world or a political dispute in a faraway country can affect the world economy. Materials handling is all about passing materials from one link to another and we can all learn something from how international businesses handle these large-scale disruptions.

What could a volcano eruption in Iceland have to do with the running of a warehouse in Illinois? As you watch the evening news, you feel sorry for all the people and businesses that have been affected by the disaster, but thankfully, yours is a local business and there is nothing you rely on that comes from Europe.

After the eruption of Iceland's volcano, many of Europe's most vital supply chain links, the airports, were shut down because of poor visibility. The crisis lasted for weeks and affected thousands of businesses, crippling many. While many businesses scrambled to forge other materials handling links, a handful of other businesses already had risk management strategies in place and simply shifted to "Plan B."

No matter how smoothly your operations have gone in the past, a "Plan B" is always necessary. The odds of a volcano erupting in your neighborhood are probably very low, but that doesn't mean that some other unlikely event won't occur to your business. Something as small as your forklift breaking down just when a truck arrives to take a large delivery or having a shipment of parts held up during a labor dispute could amount to the equivalent of a volcanic eruption for your business.

As Murphy's Law states, "Anything than can go wrong, will go wrong." While it is impossible to cover every eventuality, it is possible to minimize risk. In the case of your forklift or any other motorized equipment you rely on, regular servicing and maintenance checks are not just prudent, they are absolutely necessary. If the forklift has passed its "use by" date, it should be replaced. While you may balk at the expenditure, especially in economic rough times, making do with worn out equipment to save a few short term dollars is not a wise decision to make.

How important is it that the parts you ordered from overseas arrive on the promised delivery date? Would it be catastrophic if they arrived late or not at all? If so, look into finding alternative sources for the parts and be sure you have enough in stock to see you through a crisis.

The most successful companies often got that way because they had solutions to supply chain disruptions when others did not. They had risk management strategies in place for materials handling disruptions when other companies did not. Take a little time to study their strategies and implement your own. It's a lot better to do that than to go on hoping for the best.

by: Kristen Pryor

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