Supply Chain Risk Management Blog

Keeping the lights on

Beware the black swan: That was the warning from GlaxoSmithKline quality assurance and compliance manager Stephen Mitchell at a recent conference in London.

“We’ve got to refocus on areas of potential vulnerability in the supply chain,” he’s reported as saying. “If there’s a massive power failure or your IT goes down, what do you do? You need a plan B and even a plan C, which we don’t see often enough.”

Mitchell’s surely right about the need to look at supply chain weaknesses in the pharmaceuticals industry. Whether a power failure qualifies as a “black swan” is another question, though.

In author Nassim Taleb’s original use the term had in mind “highly improbable” events that have an extreme impact. Power cuts are, as many businesses and homes have recently discovered, all too common – whether as the result of flooding, storms or technical problems.

For the most part, the pharma industry is able to mitigate the impact of such cuts, so that they don’t interrupt the operation.

Power cuts do have the potential to seriously challenge the supply chain, however. First, as Mitchell pointed out, human error can rapidly undo resilience – and, as this tale makes clear, quickly make highly improbable events materialise. There are also a number of more recognisable black swan events, such as EMP attacks or geomagnetic storms, as well as ever-present threats such as terrorism.

For many parts of the world, however, fragile and unreliable power networks are not the results of black swans but business as usual. The challenge for businesses not directly affected is, most obviously, to have robust strategies in place to ensure they know which parts of their supply chain are in vulnerable regions and the strategies those suppliers have in place to ensure resilience.

But there is another element to robust continuity planning, too: looking ahead to potential future problems much closer to home, where we take reliable power for granted. As ever, the best way to keep the lights on is to make sure you’re not in the dark about the potential risks.

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