Things That Are Beyond Our Control in the Supply Chain

THINGS THAT ARE BEYOND OUR CONTROL IN THE SUPPLY CHAIN 

Another example is palm kernel oil in Indonesia. In order to attempt to protect the economy of Indonesia a few years ago. General Suharto banned the export of all palm kernel oil from Indonesia, eliminating 70 percent of the world s supply. This created an immediate market shortage that impacted maity product lines around the world. Much of this material was being purchased on long-term contracts that essentially became null and void when this happened. 

Many contracts have force majeure clauses in them that break the contract in event of some sort of catastrophe that can immediately impact the supply chain. Some examples of this are a fire in a chemical plant, a hurricane like Katrina, a tornado, or earthquake. If you have a good relationship with the supplier, you will find out about this sooner than if you do not have a good relationship. 

I was in a situation where the compaity I was dealing with had a major breakdown and could not meet their contract demands so they had to declare force majeure to protect the comparer. Some customers were not happy about this, but they had to deal with it. 

Several other companies that I have been involved with over the years have had to use this clause in their contract. They had a natural disaster, fire, ej losion, and so on, that caused their production capability to cease indefinitely. 

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