Nice article about companies and their supply chains. I particularly enjoy the cases where the company demands suppliers be compliant before they themselves are scheduled for compliance.

Supplying demand As Y2K deadline looms, some businesses press for readiness assurance

03/13/99

By Jim Landers / The Dallas Morning News

WASHINGTON - Deadlines for companies big and small to fix the Year 2000 computer problem are arriving well ahead of New Year's Eve.

It's been well publicized that unless repairs are completed by Jan. 1, millions of date-sensitive computers and microprocessors could fail as their programs interpret two-digit year entries of "00" as 1900 rather than 2000.

But some regulators and corporations want assurances long before Dec. 31 that nothing will go awry.

Big automakers, for example, have given their 125,000 suppliers until the end of March to be Y2K compliant. The Federal Deposit Insurance Corp. also is requiring more than 10,000 banks to finish repairing and testing their data processing systems by March 31.

While the companies are scurrying to comply, they're afraid to make any guarantee nearly so soon.

"If I responded, I would be committing for the performance of all of my suppliers," said Don Summers, president of Austin Generators Service.

Mr. Summers said Congress should swiftly enact Y2K liability reforms. Until then, instead of answering the letters he's received from his Central Texas customers demanding an accounting of his Y2K readiness, he replies with a form letter. It says, in effect, "we're working on it."

Specifics, please

Such vagueness won't cut it with some companies.

Doctors and hospitals won't get paid by Medicare if their billings aren't in order by April 5. Stockbrokers could be forced to shut down by the Securities and Exchange Commission on Oct. 15 if they haven't gotten their systems in sync with the turn of the century.

Jeri Bender, vice president and chief information officer of Nestli USA, told a Senate committee last week that her company is confident that it will have all of its systems repaired by the middle of this year. But Nestli has warned its top 50 shippers that they must demonstrate Y2K competence by May 1 or lose its business.

To meet demand for its food products when 2000 arrives, Nestli's imports of cocoa, coffee and other commodities will peak in September and October, Ms. Bender said.

"If they don't demonstrate Y2K compliance by May 1999, we will cease doing business with those shippers," she told the Senate's special Y2K committee.

"Most of our customers have done that to us," she said after the hearing. "We have to demonstrate to them our readiness; we have to show we can do year 2000 orders."

More often, the threat of lost business is implicit. Many big companies nearing completion of their own Y2K repairs are sending letters down the chain of their suppliers demanding detailed information about readiness and dates when compliance will be achieved. The responses are crucial to contingency plans such as building inventories or finding alternate suppliers.

General Motors challenged Texas Instruments to be ready by March 31. But TI, which supplies semiconductors to GM, Ford and other automakers, has given its suppliers until June 30 to finish work on the most important systems.

"The ultimate objective is that there be no significant problems as we [make the] transition between 1999 and 2000," said Joan Kellogg, a member of the Y2K program office at Texas Instruments. "If we asked our suppliers to be ready then [on Jan. 1], it doesn't allow us time to test."

Lack of response

Small companies on the receiving end of these letters often say they don't have the time, money, or, on advice from their lawyers, the inclination to respond.

"I have been getting lots of these letters," Mr. Summers said. "The threat is subtle, not direct. I do not respond by filling out their forms. My attorney says our best response is no response."

To do otherwise, Mr. Summers said, would vouchsafe a reply for more than 100 companies that supply him with everything from electricity to lubricating oil.

Austin Generators Service handles more than 300 customers who have emergency electricity generators. These customers include hospitals, nursing homes and office buildings. All are looking at their generators as contingencies for any power failures.

They want to know that Mr. Summers' staff of 12 will come running to repair the generators if they don't work. They also want to know if his bookkeeping practices are Y2K compliant. Y2K problems in one company's records can feed bad information to another company.

Austin Generators is spending $20,000 to fix its data processing systems, and Mr. Summers expects to be ready for the millennium. But the same vagueness he provides his customers vexes his efforts to find out whether his suppliers will be ready.

"If anything causes panic in this country, it's the inability to get straight answers from anybody," he said. "We get nothing but vague, feel-good responses. ... They treat us like children, like they're explaining the sex act to a 3-year-old."

Mr. Summers is active in the National Federation of Independent Businesses, which is lobbying for sweeping liability caps for business, Y2K-related or otherwise.

Measures are advancing in both the Senate and the House. But the Justice Department and some Democratic senators object, saying the bills are too broad, protect the negligent and remove a major incentive to get Y2K repairs done in time.

Last year, Congress passed a bill that President Clinton signed allowing companies to trade information without risking liability, but many firms say it hasn't done enough to encourage candor.

Enrique Salem, vice president and chief technology officer at Symantec Corp. in Cupertino, Calif., said the need is so great that he is confident that Congress will pass Y2K liability legislation before November. Symantec makes Norton software products.

Deadlines among companies, meanwhile, serve many useful purposes, including waking up those who are tardy, he said.

"All the people today who are procrastinating will wake up when they get a letter saying 'you've got until this date to get it done,' " Mr. Salem said. "Getting a letter from a customer is going to wake them up pretty quickly."

-- ED Doc (Justadoc@home.com), March 16, 1999

Answers

It's the Information Age, but getting information on information systems isn't so easy, because it's also the litigation age, the spin age, the competitive age, the apathy age, the cover-up age, and the confused age. Just to mention a few ;-)

Right now there is nothing putting a lid on human foibles and character holes. A romper room gone out-of-control and over-the-boundaries. A comeuppance is coming up ...

xxxxxxx xxxxxxx xxxxxxx xxxxxx

-- Ashton & Leska in Cascadia (allaha@earthlink.net), March 16, 1999.

A subject very close to my heart at the moment!As a small business supplying local authorities & institutions we have been asked whether we will be compliant come 2000.Our honest answer is that our internal systems are already compliant but we are dependant on raw material suppliers,power & water,the banking system(international)phone/fax (international)and mail(international). Our own compliance enquiries results:- Raw Material Sources USA & Phillipines...Should be OK Really? Power No problems Really? Water No problems as very few computers in delivery system.If there are shortages businesses will have very low priority.A Maybe? Banking ..National system should be OK but forget about international transactions International telephone/fax.as for banking above. International delivery as for banking above

Running time of business without orders or payment approx 6 weeks. Contingency Plan. 1.Whip in orders in the Autumn with payments to be made before Christmas.2.Stockpile raw materials & finished goods this year. 3.If necessary close down & prepare to hibernate until March/April when hopefully things will be clearer. To anyone who thinks this post is not about personal survival,think again.Like many small family run businesses,if we go down that our income gone period.You bet we are concerned about our supply chain!Anyone else in the same position ???

-- Chris (griffen@globalnet.co.uk), March 16, 1999.