Dive Brief:

• Starbucks' use of real-time alerts, as a part of its incident management tool, decreased response to disruptions in various parts of its operation from 1-2 weeks to 2-3 days, the company said during a webinar last month. 
• Starbucks used a feature to look into the root causes of disruptions to identify its supply chain trends and pinpoint supplier product availability issues. It also partnered with suppliers to compile information to improve supplier performance.
• Starbucks said it wants to continue using the tool and expects its supply chain partners to increase adoption.

Dive Insight:

Starbucks started a process last year to create a more agile and resilient supply chain to make it easier to solve operational and logistical emergencies. That process started with the software provider Elementum right before the pandemic hit the U.S. And now, a year in, Starbucks and other companies are clamoring to integrate risk management systems into their operations to provide visibility before disruptions occur. 

"Disruption is inevitable in a supply chain and therefore you have to find ways to embrace it," said Stephanie Eberts, a supply chain architecture program manager at Starbucks. "COVID-19 is a prime example of that unexpected and unpredictable disruption, and incident management allowed us to adapt, track and manage our supply chain in an effective way."

Though companies regularly identify risk management as a necessity, implementing a system that has robust analytics and provides end-to-end visibility can be daunting.

A survey by Gartner last year found that 40% of organizations had a dedicated supply chain risk team in place.

COVID-19 created an environment where companies ran the risk of multiple disruptions.

Packaging manufacturers competing for raw materials dealt with higher lead times, finding that their suppliers had limited product. Hospital systems and companies attempting to source personal protective equipment learned that government stockpiles weren't enough to meet demand and had to scrounge.

And supply chains continue to face soaring rates for trucking and frieght rates, congested ports, and labor insecurity, among other challenges. Risk management systems offer the possibility of stability and solutions so companies can react fast and effectively, allowing for more agile and resilient supply chains. 

Environmental risks are projected to cost companies nearly $120 billion in the next five years. As climate changes produce more severe weather, incidents like last month's winter weather that crippled supply chains in Texas are more likely. Companies must find ways to mitigate routine and extraordinary risks to deliver products with little to no interruption in the moment and cut long-term threats to cost.

Starbucks' supply chain professionals said that by using its incident management system, the company was able to solve operational hurdles like labor shortages, facility issues and transportation problems caused by the winter storm in Texas.

This story was first published in our weekly newsletter, Supply Chain Dive: Operations. Sign up here.