Failure Modes
While the types of disruptive events seem unlimited, there are only a few actual outcomes that affect a business. And since these outcomes are essentially ways that a system can fail, we at MIT's Center for Transportation and Logistics refer to them as “failure modes.”
From our research, we have identified six different ways that a supply chain can fail:
Capacity to Acquire Materials
This mode mainly includes loss of sources of supply or the availability of materials.
Companies told us they focused their business continuity plans on backing up their suppliers with qualified second sources and developing backup plans with sole sources.
Capacity to Ship or Transport
This mode mainly entails the loss of the ability to move materials, such as supplies, work-in-progress, finished goods inventory, and consumables.
Companies told us they added backup plans for transport. Some have set up contracts with other third-party logistics providers to have a backup ready.
Capacity to Communicate
This failure mode mainly includes loss of the ability to communicate both internally with employees and externally with suppliers and customers.
Most of our respondents relied on traditional IT backup as primary source of resilience against this type of failure.