Asia, better brace yourself for Usagi! He's not in a good mood…

The next big disaster of 2013 could be the Category 5 Typhoon Usagi that is set to hit Taiwan, Hong Kong and China Mainland this Sunday.  Don’t be surprised if there are supply chain disruptions.

Nathan Freeman, Climate Science Applications & Outreach Coordinator, for the NC State program Climate Change and Society, gave me a heads up today about what is in store.  And it isn’t pretty.

The storm – named Usagi – has achieved super typhoon status, after an amazing burst in its peak winds from 75 mph Tuesday to over 160 mph today. (Typhoons become “super typhoons” if their peak winds reach 150 mph or higher). It is now equivalent to a category 5 hurricane.  I didn’t know this!)

Nathan also shared his thoughts about how companies need to be thinking about this in the context of supply chain management and climate change.   He’s  no longer sure it’s necessary to conduct detailed vulnerability assessments for specific areas given the potential scale of damage as we may expect from Typhoon Usagi.  From a US import manufacturer perspective, it may be good enough to assume periodic natural disaster disruptions and develop climate adaptation supply chain contingency plans.

One idea:  import manufacturers might diversify production partner locations instead of having all of their product sources in a single basket.  For example, in addition to Southeast Asia, the US company might consider a second manufacturing contract with a company in Ireland, Eastern Europe or South America — wherever the cost per unit is affordable and climate vulnerability may be less intensive.

Another element of a climate adaptation plan might be to hold a certain percentage of product in inventory vs. 100% just-in-time manufacturing.  It’s a bit old fashioned, but it’s better to at least fill some orders during a disruption vs. none at all.

At any rate, with Usagi bearing down on you, it might be a bit late to be taking this course of action…