August 2007 | Commentary | IT Matters

Bouncing Back When Disaster Strikes

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When natural disasters strike, businesses often must frantically search for essential items to deliver to beseeching customers.

Adept use of sophisticated information tools can help retailers and suppliers "weatherproof" their supply chains. Diverting shipments, moving inventory to forward locations, and anticipating potential spikes in demand, can help moderate the effects of natural disasters.

The following tips can help you establish supply chain technologies and procedures to operate effectively when a crisis occurs.

1. Ensure real-time information sharing. Businesses can achieve the flexibility needed during a crisis by sharing key supply chain data with business partners.

Information transparency is critical to providing visibility into product movement and understanding operational impact.

In a weather-related emergency, a retailer is likely to face disruptions in receiving products allocated to, from, or through affected areas.

Accurate product tracking and visibility enhances the ability to locate products in the supply chain at any time.

The ability for retailers, carriers, and suppliers to access the same real-time tracking information helps ensure product is rerouted to a nearby facility or forward location.

2. Implement intelligence and responsiveness tools to anticipate and quickly react to changing demand. Retailers and shippers need true responsiveness to sense and react to customer demand.

Product movement intelligence tools, such as RFID, let retailers reallocate product out of harm's way, and help maintain top-line profits even during an emergency. These tools also provide visibility into product shipments and cost structures.

Visibility to the exact location of products on individual trucks is vital. If a truck is rerouted, it will need to arrive at multiple destinations in the right order to facilitate efficient unloading.

Responsiveness tools help companies anticipate demand changes and intelligently react in emergencies.

3. Drive the supply chain through a single point of demand. Responsiveness means accurately anticipating demand changes. In a natural disaster, demand can spike and shift unpredictably. Time to react is razor-thin.

Establishing a single point of demand, instead of forecasting from several sources, can increase demand visibility. Time is not wasted reconciling information from different divisions.

Companies can respond quickly, scheduling necessary labor resources based on expected volume increases and planning for asset replenishment back through the supply chain.

4. Develop programs that allow for demand-shaping scenarios. Demand shaping is essential to weatherproofing the supply chain.

If a major storm is predicted in one area, retailers need the ability to increase sales at other locations to protect top-line profits. That may include developing an unscheduled promotion and diverting certain non-essential products from storm-affected areas to the promotion.

To shape this scenario, retailers must know the true cost and delivery times of products. They can then "shape" demand based on the supply chain's capacity constraints, which differ for each company.

5. Establish careful disaster planning in advance. Solid planning and a responsive supply chain can mitigate the devastating effects of natural disasters. Advanced planning and information tools can help retailers and suppliers withstand the supply chain dislocations these events cause, and maintain top-line performance.

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