After Storms, Fixing Supply Chain
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Debris from a damaged business sits on the side of the road on US1 in Marathon, Fla., in the aftermath of Hurricane Irma. (Photo by Angel Valentin/Getty Images)
Get Your Supply Chain Back on Track in the Wake of the Hurricanes
Companies have an even smaller margin of error than usual entering peak season, due to the ripple effect of the recent hurricanes.
The 2017 hurricane season wreaked unprecedented damage and destruction on the southern United States and Caribbean, with three catastrophic category 4 and 5 storms occurring within a single month.
While the eye of the storms have passed (we hope; the latest news is that Tropical Storm Nate could develop into a hurricane this weekend), their effects will be felt for months to come, particularly as they caused closures at major ports including the Port of San Juan, the Port of Houston, the Port of Miami, Port Everglades and the Port of Savannah.
The ripple effect of these delays will be felt up and down the supply chain, from these port closures delaying shipments in and out of the country, floods leading to lost inventory and general destruction keeping companies closed for days or weeks at a time. Adding insult to injury, manufacturers, suppliers and distributors are facing the impact of the storms at the worst time possible: the lead up to holiday season.
September and October, which are typically months spent stocking up on inventory, forecasting for the holiday season and ensuring vendors and staffing are lined up, have instead become “catch up” months to regain precious time lost from these storms. This will lead to an even smaller margin of error for brands as they enter the critical season of peak demand surrounding the holidays, meaning it’s up to brands to plan and put systems in place to ensure they have done absolutely everything in their power to ensure things go smoothly. But where to start?
Assess Internal and External Damage
Once victims of these storms are in a place where they are able to get back to work—a process which may require some creative thinking given the evacuations that took place in Florida and Texas—the first step will be to assess the damage incurred, and come up with a list of priorities that need to be handled before things can begin to truly move forward. If brands are lucky, physical damage to facilities will be minimal, but if not, ensuring employees can safely work must be priority number one.
Beyond that, assessing the state of inventory and machinery (What’s unusable? What can be salvaged?), checking in with vendors to assess the damage to their facilities and gauge their level of readiness to move forward, and gaining an understanding of what exactly the business and its vendors are up against will be paramount. For brands that were able to plan for the hurricanes before they hit, it’s likely that they had a deal in place to source inventory from an unaffected market, so determining how to transport that inventory to where it needs to be in time for the holiday rush will be top priority. Brands can expect to incur increased short-term transport costs in these situations, given transporters are likely already moving at near-peak capacity.
For brands that were unable to plan and move inventory, assessing just how much was lost and then determining a way to make up the difference will be most important. This may require brands to implement quantity limits on products in the interim. Brands that procure their products through a single source will likely face the most difficulty, especially if that source is located in an affected area.
Be Flexible, Nimble and Patient
While it can be tempting to come up with a contingency plan on the fly, plans developed during times of crisis are seldom robust and often create more stress and uncertainty when it’s needed least. Instead, once brands have an understanding of what they and their vendors and partners are up against, they should focus on managing the situation one step at a time. This allows them to remain flexible and nimble, reacting to setbacks and unexpected issues as they arise versus being stymied by a plan created under duress.
Everyone has a million things to do and has customers who need to be serviced, but now more than ever businesses need to trust the people they work with (both internally and externally), make exceptions and understand that while things may not go entirely smoothly, the people around them are doing their best to get back to normal. If they can succeed in this, they will inspire loyalty with grateful employees, and develop stronger, longer lasting relationships with vendors and partners.
Learn from Successes and Failures Alike
Once things have settled down and are largely back to normal, brands should take a step back and assess their overall handling of and reaction to this catastrophic event. What were their strengths? Weaknesses? Asking themselves—and their employees, vendors and partners—these questions will be key, especially as they move into the next phase of the aftermath: planning for the next event.
As mentioned before, contingency plans created in real-time rarely work out—they tend to be shortsighted and high-level, and in some cases can cause more harm than good. But that doesn’t mean a plan shouldn’t be in place.
For organizations that do not already have one, take this reflective time as an opportunity to create a business continuity plan (BCP) that will influence action for all manner of natural and man-made disasters moving forward. Plan for crises where there is some warning (like hurricanes), where there is the opportunity to activate contingency locations, move inventory and run lines to create back-up inventory before the crisis hits, and also plan for crises that can hit out of nowhere, like fires or earthquakes.
Once the plan has been developed, it is necessary to make sure all key personnel have a copy of the plan and know what to expect during different scenarios. If a brand already has a BCP in place, they should use this as an opportunity to update the plan and make sure that it is well understood by all parties. They should also reach out to partners and vendors and insist on their development of such a plan.
Of course, as the saying goes, “No plans survive first contact with the enemy,” and there will always be an element of ad hoc planning during the next natural disaster. Having a plan in place, however, and adjusting it as needed is a lot better than having to think up everything on the fly.
The recovery and cleanup following these major natural disasters won’t be easy, especially not as we head into the busiest time of the year. But if organizations are able to band together, both internally and with their external partners and vendors, it’s possible for the process to create a stronger, more bonded community and to serve as an opportunity to plan for the future.
