World Procurement Congress: Rick Hughes and risk.

Every supply disruption, according to Rick Hughes, is an opportunity. The CPO of P&G described to the World Procurement Congress how the consumer goods companies has changed and grown from past disruption.

In his keynote speech, he outlined the company’s response to the much-reported ‘Diaper apocalypse’.

In December 2012 one of the main suppliers of an input material for nappies experienced a fire.

During the blaze, one employee lost their life as the entire facility was gutted. In one hit, 40% of the world’s supply of the material was knocked out. This created significant press interest in the impact of the lives of millions across the globe.

To manage this, obviously P&G required to work with a wide range of stakeholders, ranging from suppliers, to other departments even to senior members of the company’s own management.

The philosophy of P&G’s supply chain runs on:

1. Agility;
2. Adaptable; and
3. Aligned.

In short, supply can adapt to change on a structural or short-term changes as well as being responsive to stakeholder needs.

The leadership was tasked with communicating clearly to all concerned partners as well as outlining a road to resolving the situation. The answer came in part from working with the supplier in re-activating a moth-balled factory in the USA.

The key output, for P&G, was to in using the disruption to restructure the supply chain and ensure it coheres to the above three principles.

“We have come out of this,” Hughes said, “with a much strong supply chain.”