Supply chain impact before, during, and after Hurricane Irma

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What are your supply chain thoughts when you see this picture?

As pictures start to emerge showing the damage caused by the recent string of hurricanes like Harvey and Irma, immediate thoughts go to the safety of the people caught in the path of these storms. Thoughts and hopefully many donations are going to all those involved in disaster recovery efforts. The image below is an aerial photo taken and released by the Dutch Department of Defense showing the damage of hurricane Irma wrought on a shipping yard in the Dutch Caribbean island of St. Maarten.

If you happen to be involved in any way in supply chain, whether it’s supply chain planning, manufacturing or distribution, your next thought after hoping people are okay is likely, “holy crap!”. Once the initial shock has worn off, your supply chain instincts will kick in as you assess the damage from a supply chain perspective. You’re probably asking the question, “What’s the impact on supply?”. As you look at this picture, it’s natural to think about the amount and value of supply that is damaged or stuck on route. That immediately leads to worrying about the impact on the customer:

  • What demands will be left unsatisfied by the supply disruptions?
  • What orders should be filled with the limited supply available?
  • Are there other capacity disruptions?
  • How long will it take to recover?

If your supply chain happens to support the disaster recovery in any way, thoughts to a spike in demand is something else to manage. Bottled water, generators, batteries, building supplies, food supplies, the list could go on. Delivery, especially in support of relief from the destruction and customer satisfaction are obvious immediate concerns, but then cost and margin questions soon follow: What’s the impact on the supply chain when prices jump due to limited supply? What’s the impact on margin with a likely hike in fuel costs? What’s the financial hit on using more expensive alternate materials, suppliers and shipping routes? You could think of all these questions as “after thoughts.” At risk of beating our supply chain chest, practitioners have certainly learned their lessons from past experiences like Hurricane Matthew. Supply chain thought leaders began thinking about Irma long before the pictures surfaced. For example, Florida power companies began staging vehicles and equipment in strategic locations well in advance of the arrival of Irma. This was a strong example to help convince customers and residents they should prepare, as well. On top of this, AT&T, Verizon Wireless, Sprint and T-Mobile sent crews to cell sites across Florida to top off fuel generators, test back up batteries and protect facilities from Hurricane Irma’s anticipated storm surge and associated flooding. Many companies like Home Depot and Target were working with warehouses and distribution centers to ensure stores were well stocked. These companies are preparing their supply chains and stepping up 24/7 efforts to restock as merchandise starts to fly off the shelves as the cleanup continues. This can mean pre-staging supplies from distribution centers to stores in areas at risk. For supply chain leaders who took a preemptive strike against the forces of Irma, they’re thinking, “I am glad we prepared” when they see these pictures. Today, companies can easily simulate any number of scenarios to understand impact, and then determine preparation and response plans that will minimize the impact of the destruction. For example, supply chains can simulate a supplier being down for a day or a week, simulate a spike in demand and the ability of the supply chain to satisfy the increase in time to deliver goods to affected regions, and simulate an alternate source or more expensive supplier. Today, planners can have answers to these questions minutes after the National Hurricane Center issues its first press release on the next hurricane. The final thought we should all be thinking when we see these pictures from a supply chain perspective is “what other questions should I ask before the next hurricane or weather event?”. Let us know what you would add to the list.

Discussions

JD Matlock
- 9월 22, 2017 at 9:56오전
Excellent article, stimulating and thought provoking. Well done, Bill DuBois!
Tara J. Havard
- 9월 25, 2017 at 6:07오후
I agree, excellent article. From a business continuity perspective, Supply Chain should always be thinking of the worst case scenario. Hurricane Harvey did impact our supply chain but there were alternative solutions. During these times, it is important to be sensitive when dealing with suppliers. You never know what they are dealing with on their end. I was checking in with my suppliers the dat after Harvey hit, just to see if they were ok (including their families) and that our thoughts are with them. They shared with me how insensitive people had been around the country demanding this and that. Kindness goes a long way.
Bill DuBois
- 9월 26, 2017 at 10:21오전
Thanks Tara. You make a great point about putting yourself in the shoes of your suppliers. Some customers I talked to were working with their suppliers to help in collaborative recovery plans while negotiating with end customers to ease the demands on those downstream suppliers. In the end the links of the supply chain and the people in those links are all connected. Understanding and kindness only makes those links stronger. Thanks again for the comment.

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