Supply Chain Disaster Management

1. In compiling preliminary data for its Supply
Chain Visibility and Performance Study, Boston-based Aberdeen Group found that
82 percent of companies claim to be concerned about
supply chain resiliency to disruptions, but only 11 percent
are actively taking steps to manage the risks.This
comes at a time when those same companies have reported
at least 10 significant supply chain disruptions in
the last five years, and 27 percent of them have had more
than 20 disruptions.
2. Firms that do experience disruptions, 40
percent never properly recover and end up shutting their
doors for good within five years of a major disaster.
3. Some potential supply chain vulnerabilities:
a) A
lack of redundancies, in terms of data and information, at the supplier,
manufacturer and distributor levels
b) Single sourcing for some raw materials with no back-up;
c) Companies are
not capable of rerouting shipping if a facility goes out;
d) A
critical shortage of drivers and transportation capacity.
3. Communication Capability Is Critical: In New Orleans, the point of
entry for a large portion of all the coffee
that is consumed in the United
  States, as much as 1.6 million bags
of green coffee beans were presumed damaged or destroyed in warehouses
near the port. Coffee roaster and distributor Just Coffee, based
in Madison WI, for example, had $800,000 worth of raw beans sitting
in a warehouse near Lake
Ponchartrain. and company
officials suspected
that they were ruined, but, because the area was without any
form of communications, no one could tell for sure. A back-up system that automatically re-routes communications through
another solutions provider if the main telecommunications infrastructure
is knocked out is key. Further, creation of toll-free hotline and dedicated Web site where employees, customers
and suppliers can check on the status of operations will be useful. Protecting e-mail data with tools such as NearPoint Disaster Recovery solutions is important.
4. Getting Freight To Roll Again:
a) The port facilities of Chiquita Brands International in Gulfport, MS were completely damaged. The company put together a complete contingency plan,
including secondary distribution centers and alternate routes,
modified customer assignment tables within its order entry system,
and shifted inventory away from distribution centers in the areas
that were hit, all in about 12 hours. Now the company uses the SAILS 21 supply chain planning solution
from Insight to help it determine what to do in the event of
another major storm.
b) Wal-Mart
Stores, Bentonville, AR, had two
distribution centers affected by the storm, but its many other distribution
centers in the area picked up the slack and spared the world’s
largest retailer any major disruptions.
c) Procter
& Gamble, which suffered losses at four Louisiana facilities for
its Folgers coffee operations, worked with its suppliers to identify
in-transit goods and redirect them. It also shifted materials and
warehouses and brought on new suppliers to keep things running, and
quickly notified retail partners of potential supply delays and
restrictions. When packaging supplies became unavailable, it quickly
went back lo an old can producer who put out special cans.
d) When
Flowers Foods, Thomasville, GA, lost a good deal of its
production capacity
after a few facilities in New Orleans
were damaged, it
moved quickly to reopen a closed bakery in Houston and ramped up
operations at other facilities to compensate.
5. Supply chain audit should be conducted to answer the following:
a) Can the business operate after a disaster? If not, what must
we do to get back into operation as quickly as possible?
b) Can
orders, inventory and transportation modes be secured?
c) Are
physical plants and warehouse facilities secure and structurally
sound? If not, are there alternative plants, warehouses or
other locations that can be used?
d) Will power be available? If not, what alternative energy sources do we
have available?
e) What can be done in the event of computer, equipment or telecommunications failures?
f) What
happens if key staff is lost to an epidemic, medical emergency, bomb
threat, toxic gas spill or release, hostage situation or labor
strike?
g) How can the corporate assets protected and preserved?
h) How can the safety of our employees and
drivers be ensured?
i) If
there are transportation problems, how can
the products be delivered? What happens if the roads
are closed, and what alternative routes or
transportation can be used?
j) What
alternatives do the supplier have?
k) Does the corporate insurance policy cover
disasters?

Source: Klie, Leonard. “Disaster Proofing the Supply Chain.” Food
Logistics 15 September 2007