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McKinsey Global Institute Case Solution & Answer

Could Climate Become The Weak Link In Your Supply Chain Case Study Solution

Background Information

The McKinsey Global Institute was founded in the year 1990, with an aim to develop a deeper understanding regarding the development of the global economy. The aim of the McKinsey Global Institute is to have leaders for different sectors, such as: the commercial, public and social sectors by considering the facts and figures of the company, which are based on the management of the company’s-policy and its decisions. The McKinsey Global Institute is being led by three main personals, who are: James Manyika, Sven Smit, and Jonathan Pretzel. They are the main personals who are the senior partners in the company. Different functions in the company are led by the different senior partners, senior fellows and consultant, such as: the project teams of the company is led by the senior fellow group and the main partners of the company, which includes suggestion from consultants that have been hired by the company from different countries, in order to remove the brassiness factors while making effective and intentional decisions.(Jonathan Woetzel, 2020).

Value Chain Analysis

In recent decades, while companies have steadily increased their profits globally; the length and complexity of the value chain has also increased alongside. Since the year 2000, the value of intermediate products traded worldwide had tripled, reaching $ 10 trillion a year. Companies that successfully applied the lean global manufacturing model, made progress on indicators, such as: inventory levels, on-time delivery and reduced delivery time.

The risks of a particular industrial value chain reflect the extent to which it suffers from different types of shocks as well as potential vulnerabilities of a particular company or the entire value chain. Recent research from the McKinsey Global Institute, reveals the equilibrium behaviors that many companies face in the production value chain operations while trying to manage risks. These challenges are not constant with business challenges, but rather constant with the financial crises, terrorism, extreme weather conditions and pandemics.

Aggregate Planning

Businesses tend to focus much of their attention on the types of shocks most commonly encountered by the management, which are called “unplanned disturbances”. In recent years, other shocks, such as:trade disputes,causing bans, so the companies have begun to incorporate them into their plans. However, other types of shocks that occur less frequently, can cause greater loss in currencies and require business attention. Suchless frequent shocks may include: the heavy rainfall and thunderstorm. For example: COVID 19: this epidemic reminds people that outliers can be rare, but they are real opportunities that businesses need to take under consideration when making crucial decisions.

Scheduling

Today, the segment is at a dead end and is slowly trying to overcome,which requires a joint effort by all the parties that are concerned. The owner should be the primary beneficiary when transitioning to a more productive model, which will ultimately reward greater programming reliability and lower costs. But, they are generally reluctant to take risks, and they do not have enough experience to deal with dark markets. Only if the availability of entrepreneurs and participants in the production system is wide enough, then they’d be able to deliver more standardized products at lower prices and change their purchasing methods.

Entrepreneurs and professional industries may suffer from loss incurrences, due to the transition to a more efficient system, in which many optimize initial prices to win orders and then modify orders and complaints as Standard or expensive regulations, which may or may not result in higher revenue instead of lower profits. Today, many entrepreneurs focus on maintaining those profits rather than measuring and improving their productivity.

Maintenance & Reliability

In many industries, people are very excited about the possibilities of advanced predictive maintenance (PdM) methods. The prospects for these new technologies are attractive. Machine learning technology is used to classify historical performance and data failure, with the goal of telling operators regarding the future expectancy. In addition to predictability, it is also a related concern that when and how errors could occur in the future. The transformation of unplanned inefficient maintenance activities into planned and efficient maintenance activities, should be allowed for downsizing the impact of equipment failures and the cost of preventing such failures.

Lean Operations

McKinsey believes Lean is not just a “toolbox” or a way to eliminate waste, asit has completely changed the way companies operates, with particular emphasis on creating a culture of continuous improvement and new leadership styles. It uses new routines and behaviors to unleash the leadership qualities. Some of the functions are maintained by the company for an effective functioning of lean operations, such as:

  • Employees at all levels, understand the organization’s vision and turn that common goal into action every day, to achieve the common goal that is set by the company.
  • Managers expect everyone to have an opportunity to contribute to the best of their ability.
  • Everyone sees the problem as areas for improving the business,in future.
  • Employees understand their customers and strive to meet their needs.

Issues and Suggestions

Floods, storms, droughts and fires are the climate hazards that have disrupted the supply chain in recent years, which has further disrupted the production, resulting in massive income loss and profit deficiencies. As the climate has increasingly changed in recent years, this changehad made the weather extreme and / or more severe. The annual probability of larger events,such as: heavy rainfall and thunderstorms led to the manufacturing of advanced technological devices in order to reverse the supply chain disruptions, which are becoming more frequent with the passage of time.

Flood protection facilities, which were supposed to keep the industrial facilities dry, were destroyed and flooded by extremely heavy rainfalls, disrupting the production of food, cars and consumer electronics, ultimately raising the products’ prices for consumers. As climate change makes extreme weather more frequent and / or severe; there is a likelihood of more severe annual events in the production and supply chain disruptions,to become more frequent.

Changes in inventory levels lead towards huge differences. Since the lean production had become popular in single and sequential production, in the 1970s; the company has tried to reduce its inventory levels and other metrics. Changes in production strategies have also added to the companies’ vulnerabilities. In order to achieve economies of scale; the suppliers usually have only one production base, with the technology to produce the goods they manufacture. Very specific requirements related to manufacturing conditions (e.g. in pharmaceuticals, semiconductors or motor vehicles) also mean that even small changes in the manufacturing environment could turn into massive interruptions. In addition to this, these special requirements make it difficult to obtain new sources of information quickly, in the event of a disaster……………..

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