There are plenty of outside forces in the world in which people have no control over and that can prove to be disastrous to businesses and the economy as a whole. All you have to do is take a look at the present economy that is in a state of disaster thanks to the COVID-19 pandemic that is gripping the entire world. Without any sort of treatment or vaccine currently available, many businesses are in a state of free-fall while economies around the world struggle to cope with what can be classified as a disaster.
While it’s impossible to predict when a natural disaster might hit and how it will affect a business, it is possible to create a supply chain that is resilient and can weather a large variety of storms. Even if the company doesn’t come out totally unscathed, they can weather it better and have that higher chance of surviving.
So, how exactly can those in supply chain management create a resilient supply chain? How can they create a supply chain that can stare down natural disasters in the eye and come out okay? Here are some steps that supply chain managers around the world can take.
Understand How Natural Disasters Can Impact the Supply Chain
If you’ve been fortunate enough not to go through a natural disaster as a supply chain manager, then you may not understand the full scope of disruption and damage it can cause. Sometimes it can be short-lived, with things getting on track relatively quickly, and other times the supply chain may be permanently damaged and will require all new systems and processes.
This blog from Kettering University Online offers a more in-depth look at just how impactful a natural disaster can be on the supply chain. And as the blog points out, it’s not just natural disasters here at home that have an impact; global disasters can throw a supply chain completely off-kilter thanks to the fact that businesses operate on a more world-wide basis nowadays.
These disasters are perfect examples of something that happened on the other side of the globe, yet had global ramifications:
- The Tohoku earthquake and tsunami in 2011 that ended up costing Japan about $210 billion. The earthquake was so massive that it could be felt in parts of Europe. The end result was that supply chains all across the world suffered from fallout.
- Flooding in Thailand in 2011. During this natural disaster, Thailand’s Western Digital offices were completely flooded, which may not seem like a big deal on the surface, but considering this one company alone is responsible for producing 25% of the entire world’s computer hard drives – it was a massive impact. In total it took more than a year to rebuild and re-start production, getting back to the pre-flood levels. The effects were felt in the company’s supply chain all across the world.
These are just a few of the examples, but the list goes on and on. Supply chain managers can make the assumption that if they do business with any sort of international partner, vendor, supplier, or manufacturer – they are tied to them, especially during these natural disasters.
Change Your Mindset
As a supply chain manager, one of the first steps in creating a resilient supply chain is to start with your mindset. It’s important to stop thinking about natural disasters as rare, and something you likely won’t deal with, and instead adopt the mindset of “expect the unexpected”.
If you start to use this as your motto, then you won’t be caught off guard and unprepared. This mindset will have you more mentally prepared for the disasters, which means you can respond faster and more efficiently.
Create an Emergency and Contingency Plan
Now that you’ve wrapped your mind around the fact that natural disasters all around the world can create a domino effect, and it’s best to expect the unexpected, the next question is, what do you do?
As most experts would tell you, the best step to take is to create a comprehensive emergency and contingency plan that addresses a wide range of natural disasters. The plan should be all-encompassing, meaning it takes a look at all aspects of how exactly the disaster would affect the supply chain.
Some of the things to consider when crafting the plan include:
- Consulting with all the various stakeholders in order to evaluate risks that exist
- Start adding items into the supply chain that come from various areas of the globe so you are never reliant on one particular area
- Evaluate and expect risks at each of the supply chain locations around the world
- Create recovery teams and assign them tasks they would be responsible for
- Give careful thought as to how a natural disaster would affect the supply chain from start to finish – right down to the customer
- Consider how a natural disaster would end up effecting production and shipping timelines, product availability, price changes, and marketing
This isn’t meant to be a short and simple exercise, rather creating an emergency and contingency plan is something that takes a lot of research, careful thinking, and time. What will be put in place will be the blueprint the company relies on in times of disaster. This means it needs to work.
What to Do in the Early Days Following a Disaster
Now that you’ve got this plan in place, should a disaster arise, it’s time to fall back on that plan, and let it lead the way. A few tips from the experts include:
- Make sure you are staying organized and sticking to your contingency and emergency plan. Don’t rush through the steps
- Be open and flexible to changes, as there may need to be adjustments to your plan
- Connect with partners and ensure those relationships are strong and in-tact
- Don’t be afraid to be transparent; in fact, this is what will ensure all partnerships stay strong
A Strong and Robust Supply Chain
Each of these tips can help you to create a strong, robust, and resilient supply chain that is able to weather all the natural disasters that may be thrown your way.