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:
- What other natural disasters in the past 20 years have impacted the computer industry?
- What does it mean to “map out your supply chain”?
Dr. Misty Blessley provides monthly guest posts from her position as Associate Prof. of Supply Chain Management at Temple U.
Understands his Customer’s Needs and Wants – by leveraging feedback from “Elves on the Shelve”, predictive analytics and generative AI, he is able to deal with his customer database of over 8 billion records