August 31, 2017
Hurricane Harvey has been wreaking havoc on Texas and is now threatening Louisiana and more. Flooding is tremendous. People are still trapped in their houses. Refineries are shut down. And more. Unfortunately, this is the devastation caused by a hurricane although it reminds us about natural disasters in general and the global impacts. The earthquake in Japan created a global impact for several months later. In this case, certainly businesses in Houston and surrounding areas are potentially shut down or, at a minimum, affected without access to local suppliers, the logistics network etc. Gas prices are going up with the shut down of the refineries and oil-related businesses are also impacted negatively. Are you planning for the most likely supply chain impacts in 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 to address potential supply chain disruption. There are few if any places immune to natural disasters. Snow storms, earthquakes, tornadoes, hurricanes, volcanoes, fires and more. There are also political unrest and strikes that we cannot control – perhaps we can influence them to a degree but that’s all. Instead of sticking our head under a rock, we better prepare and plan for what we’ll do in these situations.
Think about the disruptions most likely to occur in your geography, in your business supply chain (as you still will be shut down if you are supplied a key material from an area affected by a natural disaster or disruption) etc. Next consider ways to mitigate the most likely and impactful risks. You will have to invest to minimize the risk and so addressing all potential risks is just as bad as addressing none 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, collaborate with a competitor proactively in some sort of win/win way, strategically locate inventory etc.? 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!