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Question: Consumer products giant P&G has its


Consumer products giant P&G has its share of supply chain scope. In 2012 the company realised $84 billion in sales and 25 of its brands generated $1 billion or more revenue. In order to realise this revenue, the company procures inputs worth over $51 billion from over 75,000 suppliers, operates 140 plants around the world and over 250 shipping locations, and transports products a total distance of over 1.5 billion kilometres per year to reach 4.6 billion consumers daily.
Needless to say, this scale and scope of the supply chain does not come without risks, and supply chain disruptions can happen anywhere, any time. For example, in the last week of September 2012, an explosion at a Japanese chemical plant threatened to cause a global nappy shortage. The plant in the coastal city of Himeji, operated by Nippon Shokubai Co., is one of the world’s largest producers of acrylic acid, a primary ingredient used in disposable nappies. Powerful blasts rocked the facility as firefighters tried to control a blaze at one of the tanks containing the chemical. One firefighter died and 34 employees and first responders were injured in the blast.
Acrylic acid is a key component of superabsorbent polymers (SAP) which absorb large amounts of liquid. Nippon Shokubai makes roughly 20 per cent of the world’s SAP and maintains a 10 per cent global market share of acrylic acid. The plant had been ramping up production to meet increasing global demand, especially from China, according to Japanese media reports. Prior to the accident, the plant manufactured 460,000 tonnes of acrylic acid annually and P&G relied on Nippon Shokubai Co. for products sold in Asia.
In the face of this disaster, P&G supply chain teams had to move quickly and consider their options. There were two alternative suppliers, but these did not have sufficient idle capacity to compensate for the productivity lost from the Nippon Shokubai plant. Supply chain leadership connected to Nippon Shokubai immediately offered its assistance. The company’s Chief Procurement Officer flew to Japan to work with the P&G crisis team to consider options and solutions. As an emergency response, a Nippon Shokubai plant in the USA, which previously had been shut down, was restarted with P&G assistance and shipments were rerouted. Adjustments were required to the supply chain plan, including the delay of some new product introductions. But, in the end, zero shipments to customers were missed and no nappy scarcity was experienced at the retail level, whilst relationships between P&G and Nippon Shokubai improved and strengthened.

Question
What are the key lessons from this case for dealing effectively with disruptions to the supply chain?


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