P&Gs supply chain keeping babies dry…

P&Gs supply chain keeping babies dry

Consumer_products_giant_P&G_has_its_share_of_supply_chain_scope._In_2012_the_company_
realised_ $84_ billion_ in_ sales_ and_ 25_
of_ its_ brands_ generated_ $1_ billion_ or_more_
revenue._ In_ order_ to_ realise_ this_
revenue,_ the_ company_ procures_ inputs_ worth_
over_ $51_billion_from_over_75,000_suppliers,_operates_140_plants_around_the_world_and_over_250_
shipping_locations,_and_transports_products_for_over_1.5_billion_kilometres_per_year_to_
reach_4.6_billion_consumers_daily. Needless to say,
this scale and scope of the supply chain

P&Gs supply chain keeping babies dry

Consumer_products_giant_P&G_has_its_share_of_supply_chain_scope._In_2012_the_company_
realised_ $84_ billion_ in_ sales_ and_ 25_
of_ its_ brands_ generated_ $1_ billion_ or_more_
revenue._ In_ order_ to_ realise_ this_
revenue,_ the_ company_ procures_ inputs_ worth_
over_ $51_billion_from_over_75,000_suppliers,_operates_140_plants_around_the_world_and_over_250_
shipping_locations,_and_transports_products_for_over_1.5_billion_kilometres_per_year_to_
reach_4.6_billion_consumers_daily. Needless to say,
this scale and scope of the supply chain does not come without risks, and
supply chain disruptions can happen anywhere, any time. For example, in the
last week_of_September_2012,_an_explosion_at_a_Japanese_chemical_plant_threatened_to_cause_
a global nappy shortage. The plant in the coastal city of Himeji, operated by
Nippon Shokubai_Co.,_is_one_of_the_worlds_largest_producers_of_acrylic_acid,_a_primary_ingredient
used in disposable nappies. Powerful blasts rocked the facility as firefighters
tried to control a blaze at one of the tanks containing the chemical. One
firefighter died and 34 employees and first responders were injured in the
blast. Acrylic_acid_is_a_key_component_of_superabsorbent_polymers,_or_SAP,_which_absorb_
large_ amounts_of_liquid._Nippon_ Shokubai_makes_
roughly_20_per_cent_of_ the_worlds_
SAP_ and_maintains_ a_ 10_ per_ cent_
global_market_ share_ of_ acrylic_ acid._
The_ plant_ had_ been ramping up production to meet
increasing global demand, especially from China, according_ to_
Japanese_ media_ reports._ Prior_ to_ the_
accident,_ the_ plant_ manufactured_ 460,000_
tonnes_of_acrylic_acid_annually_and_P&G_
relied_on_Nippon_Shokubai_Co._for_ products
sold in Asia. In_the_face_of_this_disaster,_P&G_supply_chain_teams_had_to_move_quickly_and_consider_
their options. There were two alternative suppliers, but these did not have
sufficient idle_ capacity_ to_ compensate_ for_
the_ productivity_ lost_ from_ the_ Nippon_
Shokubai_ plant._Supply_chain_leadership_connected_to_Nippon_Shokubai_immediately_offered_its_
assistance._The_companys_Chief_Procurement_Officer_flew_to_Japan_to_work_with_the_
P&G crisis team to consider options and solutions. As an emergency
response, a Nippon Shokubai_plant_in_the_USA,_which_previously_had_been_shut_down,_was_restarted_with_
P&G_assistance_and_shipments_were_rerouted._Adjustments_were_required_to_the_supply_
chain plan, including the delay of some new product introductions. But, in the
end, zero shipments to customers were missed and no nappy scarcity was
experienced at the_retail_level,_whilst_relationships_between_P&G_and_Nippon_Shokubai_improved_and_
strengthened. (Source:_Presentation_by_Rick_Hughes,_P&Gs_CPO,_at_the_Procurement_Leaders_Conference,_May_2013_and
www.cbc.ca/newsblogs/yourcommunity/2012/10/potential-worldwide-diaper-shortage-worries-parents.html)

Question

1 What are the key lessons from this case
for dealing effectively with disruptions to the supply chain?