How to Prepare Your Supply Chain for Inclement Weather
Hurricane Harvey and Hurricane Irma both made landfall causing destruction and devastation in their paths. Hurricane Harvey is said to be the biggest hurricane to hit Texas in 50 years and Hurricane Irma is the first major hurricane to hit Florida since Wilma made landfall in 2005.
As a result, businesses were forced to shut down, and deliveries have been rerouted. The storms show how disaster can strike at any moment.
An effective supply chain is crucial, and without proper preparations in place, businesses are at risk for substantial, unexpected disruption. For example, the Tohoku earthquake and tsunami in 2011 cost Japan an estimated $210 billion and affected supply chains worldwide, as electronics and auto manufacturing facilities were flooded and companies like Toyota, Nissan, and GM needed to temporarily shut down their facilities.
Although we’re all at risk, there’s no need to panic. By being proactive and enforcing the following tactics, your business can prepare itself against the unexpected.
Suppliers are in tune with their current marketplace and the needs of their buyers, so by using forward logistics, they can pre-order and stock up in larger quantities.
By ordering over and above expected quantities, suppliers can ensure a larger on-hand supply to handle the increase in demand. Additionally, if companies know a storm is coming, they can redirect the inventory that would normally go to the affected facility to another. While this can increase transportation costs with the trucks traveling longer routes, it keeps the inventory moving so that customers won’t lose the product.
For instance, if goods were scheduled to be delivered to a facility in Houston during the height of the hurricane, forward logistics would allow companies to proactively reroute the delivery to a facility unaffected by the storm, ensuring the product does not go to waste.
Proactive notification, as it pertains to the supply chain, deals specifically with broadcast messages and the ability to provide instant information on issues in the supply chain. The dashboards and monitoring capabilities react based on a variety of factors like user-driven information and event-driven notifications like spikes in volume.
These notifications can be “golden tickets” as companies can email customers, suppliers, and third-party logistics providers that forward logistics is occurring and specify why. The ability to reach out not only to customers, but also other services and government entities, like FEMA, is especially important during breaks in the supply chain, as it lets others know about a surplus in supply so that they can come and purchase those supplies.
Half the battle in these high-pressure situations is knowing where to go for the answer, and with these notifications, the guess work is gone and the answer is delivered directly to the leaders in the warehouse.
Direct Store Delivery
Direct store delivery (DSD) is especially effective during a weather-related disaster as it bypasses typical distribution.
For instance, if companies want to increase their speed, there is an increase in labor and cost. However, if what they are looking to do is increase order demand then they can cross-dock, which brings in goods through one door and immediately brings it out through another door.
The second option is to participate in DSD and deliver the goods directly to an endpoint. If they know a storm is going to hit and a customer is going to need a full truck of supplies like shovels, companies can place an order and immediately put the bill of sale to the end point. DSD enables the goods to go directly from the manufacturer to the immediate destination and cuts out the extra step of being delivered to the store first and being rerouted.
Weather can impact even the most agile supply chain systems, but proper forecasting and smart planning is a surefire way to arm your business against the unpredictable.