How to Manage the Supply Chain Following a Natural Disaster

Tags: Risk Management

Planning for supply chain exceptions is increasingly an expectation for risk-sensitive shippers. The last decade has unleashed a flood of global weather disasters, from Hurricanes Sandy and Katrina to the eruption of Iceland's Eyjafjallajokull volcano to the earthquake and tsunami in Japan. Each has impacted business operations in different ways.

Failing to properly react to supply chain disasters can have long-term implications to the bottom line. That's why it is compulsory for companies to regularly assess inherent risks within their supply chains, build redundancies into their operations, weigh economy versus resiliency, and engage in collaborative partnerships to offset sudden variations in supply and demand.

4 Ways to Execute in an Emergency

No matter how much preparation goes into contingency scenarios, companies can still find themselves behind the eight ball when environmental disturbances strike. Here are four areas to consider when marshaling your supply chain in the wake of a natural disaster.

  1. Ensure total visibility. If there is ever a time to grow transparency, it is during a crisis. Shippers can explore solutions and expedite responses by opening lines of communication and sharing data with their partners. Having real-time access to tracking information similarly allows retailers, carriers, and suppliers to easily and seamlessly reroute shipments or re-position inventory. Because supply and demand patterns will fluctuate considerably in the aftermath of a natural disaster, it is equally important to capture and communicate these variances so you can re-allocate labor resources and appropriate assets to need. In lieu of managing forecasts from disparate sources, it is prudent to establish one source of accurate data so that all supply chain parties can act in unison.
  2. Designate a point person. Following a natural disaster, a lack of organization and coordination can easily infiltrate a vulnerable supply chain. Establish a chain of command that engages all functions and planning teams, and is directly responsible for creating a business continuity plan. This person or group can identify all possible disruptions to the company's operations, and determine how to quickly address these concerns. When operating on the fly, costs such as expedited shipping can spin out of control. Maintaining a central command in charge of the response can help control and mitigate unnecessary spend.
  3. Look to partners. One advantage of developing strong supply chain partnerships is the latitude they provide when times get tough. In a true gain-sharing environment, business partners have a vested interest in providing assistance when you need it. You, in turn, reciprocate that trust by committing your business to them. Transportation and logistics service providers have experience managing exceptions, and are capable of finding the right solution in a pinch. They can help you ramp up production and find capacity elsewhere, or explore how to reroute shipments, mix modes, access capacity, and expedite transportation to meet demand.
  4. Remain flexible. Companies often face the greatest difficulties when they rigidly adhere to predetermined plans. That's why opening lines of communication between internal departments and extended supply chain partners is critical. Keep planning fluid so you can respond to new challenges as they arise. For example, it may be necessary to consider alternate routings, ports of call, and intermodal options to keep shipments moving. Trucks may have to be dynamically routed if roads are closed. You may have to adapt facility operating hours, and bring in additional labor resources to ensure they are accessible at a moment's notice. Companies can often uncover new strategies for execution in the face of adversity.