A recent blog by Justin Fogarty at Supply Chain Excellence entitled “Hurricane season: are you and your suppliers ready?“  highlighted the importance of factoring the risks associated with environmental events.  In his blog, he used the coming Hurricane season to emphasize the point.   Four points were mentioned as means to mitigating the impact of these natural disasters.

• Get proactive, rather than reactive – If you’re creating a contingency plan when a storm or longshoremen strike is imminent, it’s too late. Few options will be on the table as the procrastinators all scramble. Since you can always be certain there will be events beyond your control in the next few months, it’s certainly worth preparing for them ahead of time. 
• Do the math – Floods in the Midwest forced shippers to use more expensive modes of transportation. Modeling costs to determine when it’s wise to pay the premium or wait it out will help you make critical decisions quickly. There are almost always options – the question is whether or not they are worth the added cost. 
• Beware the Bullwhip Effect - As we all know, one thing now can have huge impacts down the road. So understanding the inherent inputs, cost drivers, and risks to your supply chain will help you cope with disruptions so they don’t reverberate across your materials, production, distribution, and customers. 
• Have a game plan for natural disasters – Obviously, each and every event will be different. But having a plan and an established decision making chain of command will go a long way. The last thing you want is a “Heck of a job, Brownie” situation where everyone is hoping someone else will step in and sort things out.

Given the increased supply-chain complexity and inter-reliance of partners across the globe, it quickly becomes clear that a storm anywhere in the world can immediately impact your organization.  With this in mind, I would like to add one more point to the list.  That would be to emphasize the importance of increasing visibility and collaboration across your supply chain.  Nobody understands the risks associated with the Monsoon season better the suppliers in its potential path.  Similarly, the North American Hurricane season may cause those suppliers unneeded disruption if they do not have visibility of your contingency plans. 

Working with your supply chain partners across the globe in an effort to simulate potential high-risk events may seem unattainable to some, but with an open supplier relationship and the right tools it could in fact turn into an everyday occurrence; and an occurrence that happens for much less dramatic events.

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Tags: Collaboration, Supply chain risk management, Supply chain visibility
Posted in Supply chain collaboration, Supply chain risk management
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