How to Prepare Your Supply Chain for Natural Disasters
Is your supply chain prepared for natural disasters, such as earthquakes, hurricanes, tsunamis or tornadoes? A major aspect of handling supply chain management challenges is being certain that you’ve taken the proper steps to ensure your company’s supply chain is able to withstand emergency situations.
In developing your supply chain, it is important to assess critical risks such as port availability, where to buy and manufacture product, where distribution centers are located, and so forth. Also, the following risks that could affect your processes and should be taken into consideration:
The politics of the country play a large role in your supply chain function. Even if you’ve laid the groundwork for surviving a natural disaster, politics could keep you from fulfilling your emergency operations. Before disasters occur, take into consideration local laws and how they fit into your supply chain management disaster plan.
Consider your sources of primary and alternative logistic network modes (air, land, sea and rail). Are they readily available? What is their proximity to your supply chain? Is your infrastructure in place (power grids, power backups, a water supply, etc.)? Now is the time to confirm these resources – after a disaster is too late.
- Economical and Market
The economy can take a huge hit after a natural disaster. From unstable fuel prices to inflation, your supply chain must withstand wild fluctuations.
Once you’ve considered all the factors that could have an effect on your supply chain, it’s time to develop your plan of attack. Follow these guidelines to establish an emergency-ready supply chain:
- Plan Ahead
An excellent way to prevent mistakes in your supply chain is to run different scenarios past your team. Start with best case-, move to average case- and end with worst-case scenarios; this will put your organization to the test to see how they would handle pre- and post-disaster situations.
- Establish a Crisis Team
Before a disaster strikes, establish a crisis team that is responsible for making decisions and communicating those decisions throughout the supply chain. Communication is often lost or compromised during a disaster, so establishing the roles that a select few will manage is imperative to keeping your supply chain intact.
- Use a Variety of Suppliers
Maintaining a good relationship with a variety of suppliers is critical to your supply chain. Use suppliers who utilize different ports of dispatch, as it allows the ability to control costs and service levels in business-as-usual times, and tremendous flexibility in times of disaster recovery. Diversify transportation; have alternate routes in case of transportation disruption.
- Ask for Disaster Plans from Suppliers
Part of your supply chain preparedness relies on the disaster plans from your suppliers and logistics providers. Review your supplier’s disaster plans on a regular basis, and align their plans with your supply chain.
- Maintain Detailed Processes and Procedures
Always keep your supply chain processes and procedures up-to-date with the latest plans. Disasters often bring additional people who will need to review the latest documents.
- Monitor Regions for Threats
Threats and trends in many countries or regions can impact the stability of your supply chain. Increase your awareness of variables that could sideline trade: elections, political unrest, trade sanctions, Free Trade programs, currency exchange, labor rates, inflation, quotas, fuel prices, port and transportation strikes and pending legislation.
- Analyze the Need for Products
Consider a variety of disasters; what products and supplies will be in high demand in the aftermath? Determine an outline of necessities before a disaster strikes. You’ll already know how the demand for your products will be affected by the emergency.
- Ensure Flexibility
Without question, product demand fluctuates in a disaster. Before a disaster, confirm that your supply chain has the capacity to withstand an increase in demand. Conversely, if your products are not needed, make sure you are able to slow the demand so unused inventory doesn’t bottleneck.
- Prepare to Avoid Regions
Know the particulars of your ports. If you trade through Florida, you might need to avoid the area during hurricane season (June-November). In such a case, make sure you have alternate gateways for distribution. For products destined to Latin America and the Caribbean that gateway out of
- Ensure Data Backups are Offsite
Back-up or save all of your trade-related documents in an electronic format and store records offsite. If a disaster occurs onsite, your records will be in another location, safe and sound.
Don’t wait until it’s too late; it’s time to safeguard your supply chain against a potentially catastrophic situation. The steps you take now to ensure your supply chain management plan is disaster-ready can save you time, money, your bottom line and even the lives of those involved in the process.