Supply Chain Management and the end of the world

For most of the last decade, “virus” has meant one thing to those of us who cover the IT sector: computer viruses — malicious programs that propagate between machines connected on a LAN or, more recently, on the Internet. You know what I’m talking about — all the dudes with the funky names: W32.Blaster, W32.Slammer, W32.Sobig. But the folks over at MIT’s Center for Transportation and Logistics have some new letters to wrap your brain around: H5N1. H5N1, as you know, is the virus that responsible for the recent Avian Influenza outbreaks that have killed untold numbers of our feathered friends in Asia, Africa and Europe, as well as some humans — mostly among farmers and those who work with poultry in countries like Vietnam, China, and Turkey.

Why are a bunch of academics who study logistics interested in influenza, you ask? Well, if you think H5N1 is tough on chickens, you should see what it will do to your supply chain! At least, that was the message from the CTL’s event today in Cambridge, MA, entitled “At the Crossroads of Supply Chain and Strategy: Simulating Disruption to Business Recovery.

In a fascinating session moderated by Mary Pimm, who runs Intel Corp.’s Corporate Emergency Operations Center, executives from Intel, EMC and Arnold Communications war gamed a simulated H5N1 and its impact on an imaginary mobile phone company, Vaxxon Corp., which gets sucked into an media-epidemiological (explitive) storm after workers at a Vaxxon supplier in mainland China begin dying from H5N1.

As the simulation played out on stage, executives from the participating companies, representing their imaginary counterparts on Vaxxon’s CERT team, struggle to deal with a string of expected and unexpected events — which starts with one sick employee, but quickly snowballs to include quarrantined shipments of the company’s promising new SlimPhone, quarrantined and scared overseas management, ravenous reporters anxious for news, a panicky public and shortages up and down their supply chain after their Chinese supplier is shut down.

The presentation interspersed convincing and breathless TV news bulletins from a fictional CNN look-alike called “CTL,” as reporters and company executives wrestle with conflicting information on the outbreak: Did it pass from human to human or just poultry to human? Could the virus survive on cell phones shipped from the plant or not? Is this a problem limited to workers at the Chinese supplier or a wider outbreak?

In one of the more amusing anecdotes, CERT try in vain to reel in a rogue executive from Vaxxon who may have been exposed at the supplier’s factory, but ignores requests to stay put, touching off a minor civil emergency back home after he returns to work in the U.S. -possibly infected with H5N1.

It was great stuff — and the folks who played Vaxxon execs (almost all from Intel) seemed familiar with the exercise. But it raised more questions than answers. Even with a well-rehearsed disaster plan and cool headed actors, executives at Vaxxon still had a tough time responding to the convulsive nature of the H5N1 outbreak — as first one worker gets sick and dies, then another, then another. Unsure of how big the outbreak would get, executives were caught between big picture, long term responses and short term, stomp out the fire type responses. Should Vaxxon do whatever it can to get those SlimPhones to market in the U.S. or just give up the ghost and focus on its core corporate values — being a good corporate citizen and keeping employees and customers safe, protecting its business relationships? Executives seemed to go back and forth, while Tony Sundermeier, who is Intel’s Logistics Manager and played that role on Vaxxon’s imaginary team, struggled to keep product flowing through the company’s shattered supply chain.

While SCM technology was clearly there in the background, as Sundermeier and other executives begin researching ways to work around the shuttered Chinese supplier, those solutions seemed more like long term solutions to the H5N1 problem than the kind of “turn on a dime” fix you might imagine after reading the PR from SCM vendors.

The exercise was useful for all kinds of reasons. And, as one attendee from a company that distributes TamiFlu noted, an H5N1 outbreak is just a way to bundle up a lot of ordinary disruptions that most companies face week in and week out — absenteeism, supply shortages, software ills, PR firestorms, and so on.

All the same, while bugs like Blaster and Slammer certainly have caused their share of headaches in IT departments around the world, but those outbreaks will pale in comparison to the disruption caused by a real bug like H5N1, should it ever figure out a way to start spreading from human to human.

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