# 545
A very interesting report that backs up what many people have voiced concerns over; that our propensity for Just-in-time inventories, and moving manufacturing resources offshore could prove to be a major obstacle during a pandemic, or other long term crisis.
This time, it's food. And while this study comes from the UK, much of what it has to say pertains to the United States, and most other western societies. We've streamlined ourselves, in an attempt to lower costs and maximize profits, to the point where we are vulnerable.
It's a long article, but I'd invite my readers to spend the time to read it in it's entirety.
Food sector vulnerable to emergencies, says study
By Ahmed ElAmin
06/03/2007 - Being lean and mean in the food and drink manufacturing sector might pay off in terms of profits, but the practice has left the supply chain vulnerable to a crisis, according to a UK government report.
The government-commissioned report concludes that the drive for efficiency and the just-in-time philosophy used by the industry has progressively reduced stock levels throughout the supply chain -- with the resulting damage to its resilience when an emergency occurs.
The study highlights the need for processors to have business continuity mangement (BCM) plans in place to deal with emergencies such as livestock diseases, bird flu, or fuel shortages, as well as site-specific events such as natural disasters, product contamination or terrorist attacks.
The independent study was done by Cranfield University for the Department for Environment, Food and Rural Affairs (Defra).
Cranfield's Helen Peck, who wrote the report, makes a number of recommendations to government, including the relaxing of regulations to allow competitors to work together in times of emergency
Business continuity plans provide food and drink retailers with the measures needed to deal with any threat of disruption.
"While the UK is good at dealing with sudden onset emergencies such as the 7/7 bombings, we remain less well prepared for the less obvious or well understood phenomenon of 'creeping crises," she said.
Of all the groups in the supply chain food processors and packagers were found to be in a more precarious position than the rest.
"Their efforts centre around protection of key assets, because their operations are dependent on a few capital-intensive facilities," Peck wrote. "Some made no distinction between everyday operations, risk management and BCM."
UK manufacturers tend to rely on their ability to 'flex' production between sites as their main form of contingency, she found.
However, most conceded that the redundant capacity that provides the basis of this strategy is being steadily eroded by the pressure to reduce costs and optimise asset utilisation, she said.
"Sites are being closed, consolidated and moved offshore, at which point the risk profiles for their UK operations change," Peck wrote. "The principal dependencies switch from manufacturing sites to transport, communications and the supporting infrastructure."
One of her main conclusions is businesses are doing BCM out of enlightened commercial self-interest.
