Purchasing pros say they've little to fear from Y2K
By Brian Milligan -- Purchasing, 10/7/1999
Most purchasing professionals say Y2K is nothing to fear. After a year of careful preparations, they say their companies and suppliers are ready to meet the Y2K challenge head on.With the countdown to Y2K looming closer, many think the problems associated with the imminent computer date rollover will amount to little more than a few nuisances--if they amount to anything at all. And Y2K or no Y2K, they say the economy will continue along on its merry way.
"I think that most companies have made a very good effort to fix potential problems," says Harry Holden, quality assurance officer for More Diagnostics in California. "Their efforts are complete. Real people will take care of whatever the computers can not handle."
Y2K countdown
As Y2K approaches, most purchasing pros say:
- Their companies are ready for Jan. 1 and any problems computers have in reading the time and date rollover.
- Their most critical suppliers are just as ready and have successfully tested their systems.
- There won't be major mishaps due to the so-called Y2K bug.
But just to be safe, they also say contingency plans are in place to ensure production at their companies is not stopped due to Y2K supply disruptions. These plans include setting up alternate sources of supply, creating or making preparations to create inventory backup just prior to the new year, or ordering excess supplies through the month of February.
A recent survey of Purchasing readers indicates that purchasing pros are being realistic about the potential for the so-called Y2K bug. But even if some minor communication or computer glitches raise their heads, they can be easily solved, the purchasing managers say.
Most of the polled purchasing pros don't believe that these problems will amount to much. And if there are problems, 76% of those polled say the economy will be resilient enough to bounce back from them.
Becoming compliant
Virtually all companies polled--98%--say they have taken confidence-building steps to become Y2K compliant. And 91% say they are now fully Y2K compliant. These steps have instilled purchasing managers with a nearly fearless attitude about their situation and the near future. In fact, only 12% of the purchasing managers who were polled say they are very concerned about the Y2K computer rollover.
Meanwhile, a whopping 58% say they are unconcerned about the rollover.
"I believe all major organizations have addressed all significant Y2K issues," says George Thompson, purchasing manager for Boston Edison Co. in Massachusetts. "Small firms may have some problems, but I don't think there should be a major catastrophic upset on the economy."
Many purchasing pros agree with Thompson. In fact, 43% of those polled say they are unconcerned with the Y2K rollover. With almost the entire corporate world working on the problem for so long, they say they are confident that most large firms have taken necessary steps to prevent any major problems. At L3 Communications in California, for example, all purchasing orders contain Y2K compliance statements. Letters to suppliers and their responses have been filed, and the purchasing department has a process in place for tracking and following up with suppliers. And if certain suppliers have not convinced the department that they have decent contingency plans in place, L3 Communications has contingency plans to replace them. Critical supplies for the company will be tracked carefully.
Protecting the system
At Gorman-Rupp Co. of Ohio, the company has purchased new software designed to protect computer systems from the rollover. All of the company's tools and processing equipment have been researched, evaluated, tested, and updated for the rollover. Anything that didn't look like it could handle the rollover has been replaced.
Many companies have followed suit.
"We have equipment that supports our facility, and manufacturing operations have been upgraded or replaced with new Y2K-compliant equipment," says Cherie Chrostowski, purchasing manager for Tectan Inc. in North Carolina.
Most purchasing managers seem to agree that the biggest problem the so-called Y2K bug could bring would be an interruption in the supply chain. That's why most of those surveyed, a full 79%, say their organization has taken steps to ensure that critical suppliers are ready for the new year and any technical problems it could bring.
"We reviewed Y2K assessments and plans for all critical suppliers and made our evaluation of their plans," says Thompson of Boston Edison. "We developed contingency plans consistent with all evaluations of the suppliers' Y2K plans."
Surveying the supplier
Many purchasing managers gladly report that they have taken these preparations a step further. They say they surveyed and carefully recorded the Y2K readiness of their most critical suppliers.
"We set up a corporate database to document vendor responses from questionnaires and also document our contingency plans," says Tommy Jacks, purchasing manager for Albermarle Corp. in Arizona.
But the majority of polled purchasing managers who believe their suppliers are ready admit that there still remains a disturbing lack of proof. No one, they say, can guarantee that things will run smoothly and supplies will arrive exactly as ordered come the new millennium.
They say that in many ways, purchasing managers are at the mercy of suppliers when the clock rolls over.
"We surveyed our suppliers and those considered critical," says Dennis Remy, manager of purchasing for Gorman-Rupp Co. in Ohio. "We asked for their plan timetable and test results. But we don't have the time or manpower to test it ourselves. I'm afraid we're totally dependent on their program's success."
Remy is not alone in his belief that massive computer problems spread across the country could lead to serious problems in the supply chain. He worries that the problems could take days--or even weeks--to repair.
"I feel any interruption, even a slight one, will have a longer negative effect than the interruption," says Remy. "Any vendor who shuts down now for two weeks takes four weeks to get back to normal. Compound that with losses of power, supplier shipments, times several suppliers and their suppliers. It could be very bad."
Keeping problems away
Of the 19% of polled purchasing managers who say they are very concerned about the rollover, most say they are feverishly working with suppliers to make sure problems don't become catastrophic on Jan. 1. Their biggest concern is that the suppliers make backup plans to get supplies to them if the system breaks down.
"We are working very closely with supply organizations to ensure product availability for our production," says Ismael Chavira, purchasing manager for the Texas-based Philips Consumer Electronics Company.
To play it safe, the majority of purchasing managers surveyed say they have set up contingency plans for meeting supply requirements in the event of Y2K-related disruptions. Sixty-two percent of those surveyed say their plans will get them through the most daunting supply, production, or computer-related problems. Some survey respondents indicate they will build "just-in-case" inventory toward the end of the year. Some examples:
"[We have] alternate sources of supply, and inventory buildup prior to January 1," says George Thompson, purchasing manager for the Massachusetts-based Boston Edison Co.
"We ordered supplies by September to last through February, 2000," says Gina Collins, purchasing manager for the Utah-based Young Living Essential Oils.
"We have increased the level of inventories enough for anywhere from 60 days to six months in some cases," says Dennis Remy, manager of purchasing for the Ohio-based Gorman-Rupp Co.
The manual way
Some say, if necessary, they will resort to a more "manual" means of getting the job done if problems pop up on the first of the year and after.
"We will operate with a paper and pencil system until the computers are back," says Holden of More Diagnostics. "We will leave production inventory on hand to cover a two-week delay in supplies."
But still, most of those polled doubt it will ever come to this. In fact, 86% of those surveyed are very confident that their company will make the transition from 1999 to 2000 without any major mishaps.
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