For Tom Dadmun, it all started back in 2004 when he and other executives at communications equipment manufacturer Adtran Inc. read about the bird flu virus said to be sweeping through Asia. Adtran had already moved much of its production to low-cost electronics manufacturing services contractors in China. And, as experts warned that the H5N1 virus could blossom into a pandemic, disrupting power supplies and transportation and closing plants across Asia, Dadmun and his colleagues began to panic.
"We started going to our contractors and asking for their contingency plans," says Dadmun, who was then vice president in charge of Adtran's supply chain. "What would they do if there were an electricity shortage? Then we started asking ourselves what we would do if we suddenly had to find another contractor. It was the first time we'd had to think seriously about those kinds of risks."
But it wasn't the last time, not by a long shot. Although bird flu — at least so far — hasn't caused the business disruptions once feared, Adtran officials took the scare as a wake-up call. They began to explore other risk scenarios that could undermine Adtran's extended supply chain, and they began to put in place contingency plans to mitigate those risks. "Since then, much more of our focus has been on risk avoidance and mitigation," says Dadmun, now Adtran's program management office vice president. "It's become an unavoidable reality."
Dadmun certainly isn't the only manufacturing executive obsessing over the myriad things that can blow up, blocking their companies from quickly and profitably responding to demand. The globalization of most manufacturing businesses has made supply networks less visible and more vulnerable to disruptions. And a series of unprecedented and uncontrollable global events — from the worldwide recession, to gyrating energy prices, to high-profile product quality scandals — have combined to make supply chain executives feel that they are perched precariously on a high wire in a risk windstorm.