Published November 15, 2017
There is significant irony in the fact that hurricane season tapers down in November as the holiday season begins to ramp up. This year will be especially memorable as the U.S. will be recovering from the impacts of the 2017 hurricane season for years, if not decades to come. From the flooding in Texas due to Hurricane Harvey, to the widespread impact in Florida and the Caribbean from Irma, to Puerto Rico suffering from major infrastructure destruction after landfalls by two major hurricanes Irma and Maria, it is hard to believe that the U.S. will not exit this season with some valuable lessons learned. Yet, terms “Disaster Amnesia” or “Hazard Amnesia” are being used by those in emergency management as a warning both going into this year’s hurricane season and as a reminder that we need to be better prepared in the future.
The same can be said about major supply chain disruptions. Have today’s supply chain professionals truly learned from the disruptions in the past and are they prepared for the disruptions that are ahead, or are we suffering from “Supply Chain Disruption Amnesia”?
As with much of the Caribbean, Gulf Region, and Eastern Seaboard of the U.S., the areas impacted by hurricanes in 2017 have all seen major storms in the past. Yet, as these areas continue to grow, they also have continued to take risks and have increased their vulnerability to major storms. Further, these areas are growing, in part, due to the pleasant weather throughout much of the year. However, the new population is often ill-prepared and unexperienced with storms. As is so often the case, our society must bear the responsibility of the choices made and planning undertaken in these situations.
Prior to taking the position as the FEMA director, Brock Long stated, “I believe in what I call ‘hazard amnesia’, one of the things that keeps me up at night is this nation has not seen the devastation of a major landfalling hurricane since 2005. So, sometimes I think we forget the worst.”
As we move into the 2017 Holiday season, this is also the time when supply chain thought leaders and subject matter experts give the omen that we are at risk for major supply chain disruptions. Too often these messages are hyped up, creating a problem when trying to make today’s supply chain leaders take these warnings seriously and not becoming too desensitized to them.
The benefits of these omens outweigh the costs. We need to remove the amnesia of these past disruptions to determine how to prepare and react to the future disruptions that are bound to happen. We need to view the history of past supply chain disruptions to remove the distorted messages and minimize the uncertainty which creates confusion for supply chain professionals. Supply chain “disruption amnesia” is a widespread malady, in that people forget the lessons learned and the information they need to act on.
While hurricanes, snow storms, earthquakes, and other natural disasters can cause significant supply chain disruption, it can also come in many other forms. Vulnerabilities in the supply chain include bankruptcy declarations by key partners, oil dependence, cybercrime, IT failures, mechanical breakdowns, labor strikes, political turmoil, and the evolution of digital platforms. There are several key steps and initiatives that are necessary to ensure your supply chain is resilient. These include:
- Establish a supply chain disruption emergency management team. This team is composed of your supply chain leadership that identifies the potential disruptions, maps the impact to the supply chain, develops the contingency plans, and finally establishes the management hierarchy and communication plan that will be put in place during major disruptions.
- As with a disaster, first responders are the key to ensuring that the negative effects of a disruption are minimized during an event. Therefore, any contingency plan must include the ability to mobilize your workforce as quickly as possible. Contingencies for transportation, facilities, utilities, food and water, and their immediate families may be necessary to keep operations up and running.
- Better yet, technologies that reduce the dependence or increase the efficiency of the workforce must be evaluated and implemented. These include automation, robotics, the Internet of Things (IoT), integrated platforms, as well as a host of technologies that increase the real-time visibility of the supply chain.
- Continuity of information technology and access to data and reporting must be kept such that proper decisions can be made and actions can be taken.
- The correct balance between efficiency and effectiveness must be determined. Leadership will need to accept compromises in costs, which ensure stable supply chains. These compromises are not just limited to the period of disruption, but may be required during stable times such that the capabilities are available during disruption.
The future will bring a whole new realm of disruption to supply chains that exert complete different difficulties that the disruptions that we are accustomed to. Industry 4.0, continued globalization, expanding digital, and other technological innovations will be a driving force and will cause disruption that will require supply chains to adapt to quickly. Further, the pace of adaption that is required will grow exponentially.
Our heart breaks for everyone affected by the 2017 hurricane season. We certainly hope there is no repeat of the devastation we have witnessed. These areas will be rebuilt, and a positive consequence is that they will be rebuilt stronger and more storm resistant than they were before. They also need to be better prepared to react to the next big hurricane, much like our supply chains must be better prepared to reach to the next big disruption.
While hurricane predictions are getting better, we are still a long way away from extended outlooks into the path, storm surge, winds, and devastation they can bring. Tomorrow’s supply chain disruptions bring even more uncertainty. Every year the cycle of increasing amnesia until the next big disruption must be broken and the contingencies must be planned such that the impacts are minimized. We, as supply chain professionals, must see to it and not forget the information we have learned that is needed to take the best action going forward by taking advantage of stable times to reshape our supply chains for future periods of increased volatility.
Luckily, the rapid evolution of tools and technology is also bringing unprecedented abilities into the supply chain as well. Today’s supply chain leaders must evaluate, leverage, and adopt technologies. The world is changing and so must our supply chains.
Top causes of business interruption loss globally, by total value (2010-2014):
- Fire and explosion
3. Machinery breakdown
4. Faulty design/material/manufacturing
6. Cast loss (entertainment)
9. Human error/operating error
10. Power interruption