Weathering the Storm
How to prepare before natural disasters or other events upset the supply chain
A year’s worth of rain fell throughout Texas and Oklahoma during the month of May, according to the Weather Channel. The record-setting rains eased the extreme drought in both states but instead caused major flooding. Some homes were washed away, hundreds of drivers were stranded in their cars, and several highways were completely shut down. In Dallas-Fort Worth, a core logistics market, it rained 23 out of 29 days and became the wettest May in more than a century. Natural disasters, weather events and other unexpected circumstances often cause a ripple effect throughout the supply chain. Having an emergency plan can help transportation and logistics companies be prepared for the worst. Here are some tips from experts on how to be proactive before crises occur:
Plan for disruptions Determine how vulnerable your company is to supplier and manufacturing operations failures, logistics failures, workforce unavailability and information and technology disruptions, says Wipro Technologies, a global consulting firm based in India. Build “what-if” scenarios for each potential event and assess your ability to respond.
Seek help from insurance pros Get help from insurance brokers and insurance carriers who are familiar with supply chain resilience and business continuity planning, advises Insurance Journal contributor Kathleen Ellis. They can provide advice, recommendations and other services.
Establish a crisis team Communication is critical during a disaster. Before one happens, choose a team of managers who will make decisions and communicate them effectively throughout the supply chain, advises experts at the University of San Francisco’s School of Management.
Use various suppliers and check their disaster plans Maintain good relationships with numerous suppliers, and switch up when necessary, USF says. Also, diversify transportation, have alternate routes in case of shipping disruptions, and use suppliers who operate different ports of dispatch. Additionally, USF recommends regularly checking suppliers’ disaster plans, and aligning their plans with your supply chain.
Prepare to avoid certain regions Use historical facts to plan properly. Florida ports, for example, are prone to hurricanes from June to November. You may want to avoid the area during that time but have alternate gateways for distribution, USF says.
Monitor supply chain intelligence Continually monitor each country/region for threats and trends that could affect the supply chain, recommends Wipro. Such threats and trends include weather disruptions, port and transportation strikes, fuel prices, currency exchange, inflation, labor rates, pending legislation and political elections.
Keep data backups offsite Back-up or save all trade-related documents electronically and store records offsite, USF advises. Your records will be safer elsewhere if a disaster occurs onsite.
Test the plan regularly Frequently test your plan to make sure it will work as expected and to identify any weaknesses, advises the Insurance Journal. Conduct mock drills to help employees stay ready.