2001 Accenture Award Winner, presented for the best article published in the International Journal of Logistics Management (IJLM). This article is reprinted with permission from IJLM. Vol 12 number 2. For more information visit www.ijlm.org

On the morning of September 11th, 2001, the United States and the Western world entered into a new era-one in which large scale terrorist acts are to be expected. The impacts of the new era will challenge supply chain managers to adjust relations with suppliers and customers, contend with transportation difficulties and amend inventory

management strategies. This paper looks at the twin corporate challenges of (i) preparing to deal with the aftermath of terrorist attacks and (ii) operating under heightened security. The first challenge involves setting certain operational redundancies. The second means less reliable lead times and less certain demand scenarios. In addition, the paper looks at how companies should organize to meet those challenges efficiently and suggests a new public-private partnership. While the paper is focused on the US, it has worldwide implications.

Within days of the September 11, 2001 terrorist attack, manufacturers began to experience disruptions to the flow of materials into assembly plants. For example, Ford had to idle several of its assembly lines intermittently as trucks loaded with components were delayed at the Canadian, and Mexican borders. Toyota came within hours of halting production at its Sequoia SUV plant in Indiana, since a supplier was waiting for steering sensors shipped by air from Germany, but air traffic was shut down (1). Ford, Toyota, and other manufacturers were vulnerable to transportation disruptions because they operate a "Just-in-Time" (JIT) inventory discipline, keeping material on hand for only a few days and sometimes only a few hours of operation.

It is instructive to note that these disruptions were not caused by the attack itself, but rather by the government's response to the attack: closing borders, shutting down air traffic, and evacuating buildings throughout the country. The federal government is now readying its thinking, its institutions, its communications strategy, its military response, and its domestic defense strategy for a challenge of fighting terrorism that is likely to last a long time.

Popular wisdom repeatedly recites that the war on terrorism is unlike any past war. But popular wisdom has not yet adapted to the most fundamental way in which this "war" is different. In fact, it is not so much a war as it is a new era of continuous danger. In addition, the defensive aspects of this war will be fought on the home front, not by a professional army but by business organizations and ordinary citizens endeavoring to make the interdependencies of our economy function for their own benefit, not as the weapons of the enemy.