Tag: hurricane

OM in the News: Hurricanes and a Rare-Earth Supply Chain Vulnerability

Hurricane Helene left widespread destruction in N. Carolina a few weeks ago. One of the towns impacted was Spruce Pine, the location of the world’s largest deposit of high-purity quartz, an ingredient used in semiconductor manufacturing. Two mining companies that operate in Spruce Pine had to halt operations due to flooding and damage to infrastructure in the area.

The global semiconductor industry is dependent on Spruce Pine as the primary source for  virtually all high-purity quartz it consumes, as it is one of only a few places in the world where such quartz is known to exist. The quartz is used to create chips that power everything from laptops to automobiles.

The disruption in Spruce Pine is an example of a single point of failure – a situation in which a system is configured in such a way that failure in one part of the system causes the entire system to fail, a topic in Ch. 17. Avoiding single points of failure comes down to practicing good risk management, writes Industry Week (Oct. 24. 2024):

  • Are there any suppliers (or suppliers of suppliers) that are the sole manufacturers of a certain input? (See Ch. 11)
  • How likely a disruption is to occur – and if it occurs, how impactful the consequences will be. (See Supp. 11)
  • There are four categories of risk controls: avoidance, mitigation, shifting the risk to another party, and accepting the assessed level of risk.

One classic risk mitigation strategy is diversification – in the case of the supply chain, this means using multiple sources of supply. Some limited sources of quartz do exist in other nations. Another is holding an adequate cushion of inventory (see Ch. 12) that can ensure operational continuity in case of a disruption of supply.

Further, AI and machine learning can enable companies to gain critical visibility into their supply chains by aggregating data from multiple sources, such as from vendors, open source repositories, IoT sensors, and so on. Such analytics can answer supply chain questions that are descriptive (how many days of inventory are on hand), diagnostic (why isn’t there enough inventory), predictive (what will happen if supply is disrupted), and prescriptive (what is the best course of action to take to mitigate disruptions)–all topics in Module G of your Heizer/Render/Munson text.

Classroom discussion questions:

  1. What other natural disasters in the past 20 years have impacted the computer industry?
  2. What does it mean to “map out your supply chain”?

 

 

Guest Post: How Fastenal Weathers the Storm

Temple U. Professor Misty Blessley shares her insights with our readers monthly.

The Atlantic hurricane season in the U.S. runs from June through November, with most hurricanes making landfall between Florida and Texas. The National Oceanic and Atmospheric Administration (NOAA) has forecasted that the 2024 hurricane season could be one of the busiest on record. Hurricane Beryl, a Category 5 storm that struck Houston on July 8, is the earliest such hurricane in Atlantic history, setting a severe tone for the season. Ensuring access to supplies when and where they are needed is crucial for the region’s ability to withstand and recover from hurricane-related disruptions.

Here is the contingency plan for Fastenal, an international industrial and supply solutions company. The season began with Fastenal’s onsite team stationed at a Phillips 66 refinery in Texas, directly in Hurricane Beryl’s path. Due to the sensitive nature of their operations, refining companies must manage weather events with extreme care, which is why Fastenal staffs these sites with onsite personnel. Hurricane Beryl’s impact went beyond refineries, temporarily halting operations across Houston’s maritime, air, and motor carrier sectors, affecting numerous businesses.

In addition to its mitigation efforts with Phillips 66, Fastenal’s plans to bolster the region’s resilience, include:
 A corporate communication channel for providing rapid support to customers in affected areas.
 Ample stocks of hurricane-specific supplies, such as generators and water, at four major distribution centers (Dallas, Houston, Atlanta, and Jackson, Mississippi).
 Having distribution teams on standby to deliver supplies to affected areas as soon as access is granted.
 A private fleet allowing for quick and flexible response.

As highlighted in Chapter 11 of your Heizer/Render/Munson text, “Companies need to focus not only on reducing potential disruptions but also on how to prepare for responses to inevitable negative events.” Fastenal credits the company’s dedicated staff and advanced technology—such as its warehouse management system, which can handle both planned and unplanned orders—for its ability to respond to crises like Hurricane Beryl.

Classroom discussion questions:
1. In Table 11.3 supply chain risks and tactics are covered. Which of the risk reduction tactics is 2most beneficial in the event of a catastrophic weather event?
2. Review other weather-related disruptions and identify contingency plans. Hint: Icelandic volcano eruptions and Texas snowstorms

OM in the News: Hurricanes, F-22 Fighter Jets, and Chapter 17

We are well aware that Chapter 17, Maintenance and Reliability, is not reached by semester end in many syllabi. But we would suggest that it is an important topic, especially when we consider the terrible impact of Hurricane Michael in Florida 2 weeks ago. About $2 billion in fighter jets were trapped on the ground because of maintenance issues and forced to ride out the Category 4 hurricane.

As many as 17 of Tyndall Air Force base’s 55 F-22s sustained damage or have been destroyed during the storm. (Considering the level of destruction, all of them could be damaged). One F-22 jet costs about $139 million. The aircraft were unable to escape with the rest of the base’s F-22 fleet to Wright Patterson Air Force Base, Ohio. The jets left behind were parked inside hangars as officials hoped for the best.

But why can’t F-22 jet fighters, of all things, escape a storm? Answer: They lack the parts to be operational. “Welcome to a fighting force damaged by bad political decisions and misguided priorities”, writes The Wall Street Journal (Oct. 17, 2018). Of the Air Force’s 186 F-22s, only about 80 are “mission capable,” meaning less than half are flyable at any given time.

Part of the F-22 problem is upkeep on a coating that helps the planes evade radar. Another issue is the supply chain for parts now that the U.S. no longer produces the airplane, and some original manufacturers no longer make the parts or are completely out of business. Air Force officials say that a simple wiring harness requires a 30-week lead time for finding a new contractor and producing the part. Ripping out parts from planes that work, or “cannibalizing,” is now common practice in military aviation.

Classroom discussion questions:

  1. What OM policies could the Air Force implement to deal with this issue?
  2. Which graph in Figure 17.4 provides a better representation of the F-22 costs?