Hurricane Harvey has been wreaking havoc on Texas and is now threatening parts of Louisiana. Flooding is tremendous and many people are still trapped in their houses. Refineries are shut down and basic necessities are being rationed. Unfortunately, this is the devastation caused by a hurricane and it reminds us about natural disasters and the global impact. The earthquake in Japan had an impact for several months. In Houston’s case, businesses in the city and surrounding areas are shut down or, at a minimum, affected without access to local suppliers, logistics networks etc. Gas prices are higher with the closure of the refineries and oil-related businesses are also being impacted negatively. Taking this national catastrophe into account, are you planning for the most likely supply chain impacts that could hit your business?
What Should We Consider and/or What Impacts Could Arise?
Supply chain disruptions are commonplace and often unavoidable. Certainly, we didn’t know Hurricane Harvey would show up in Texas last month or last year, when we would have had time to address potential supply chain disruption. But there are few, if any, places immune to natural disasters. Snow storms, earthquakes, tornadoes, hurricanes, volcanoes, fires… There are also political unrest and strikes that we cannot control – perhaps we can anticipate them to a degree but that’s all. Instead of sticking our head in the sand, we’re better off preparing and planning for what to do in these situations.
Think about the disruptions most likely to occur in your business supply chain based on your geography. Remember that you could still be shut down if a key material is supplied from an area affected by a natural disaster or disruption. Next, consider ways to mitigate the most likely and severe risks. You will have to invest to minimize risk, so addressing all potential risks is just as bad as addressing none of them because you might go out of business due to lack of funds. Note a few options for addressing the most likely risks. For example, should you have a backup supplier? Or collaborate with a competitor proactively in some sort of win/win way to strategically locate inventory? Pick one or two to start, present a complete case to the executive team, corporate or Board of Directors. It will give you a great start!
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