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SCRC Article Library: Supply Chain Disruptions

Supply Chain Disruptions

Published on: Sep, 28, 2004

by: Scott Hudson

SCRC

Weather causes many disruptions and disasters around the world. Hurricanes, floods, heat waves, and earthquakes cause large scale disasters where people need assistance. An efficient, planned supply chain is critical when responding to natural disasters. Home improvement stores have used a “war room” strategy to respond to the busy 2004 hurricane season (1). Hospitals must also use efficient planning and prepare the supply chain for a looming hurricane (2). Lynn Fritz, of the Fritz Institute, says “the ultimate logistics challenge is improving the supply chains of humanitarian-relief organizations that deal with the aftermath of earthquakes, hurricanes, droughts, wars, and other natural and man-made disasters (3).” On the lighter side, in England, supply chains “stretched and buckled” to keep up with beer demand during the heat wave of summer 2003 (4). These are examples of the supply chain being utilized to its potential during times of need.

Supply Chain during the Busy 2004 Hurricane Season

Hurricanes tear up houses, boat docks, businesses, and most everything in its direct path. Hurricanes also disrupt people’s lives for several days at a time when they must get out of the direct path of the storm. Businesses must be prepared before and after the storm to handle increased demand for many items. Hospitals must have emergency supplies ready for immediate delivery. Many hospital supply distributors keep specified emergency supplies on hand for this purpose (2). Before Hurricane Charley, the materials management director at Jackson Memorial Hospital watched weather reports and ordered extra supplies from the distributor. He recommends that emergency plans should be in place and must be “implemented with precision, or supplies may not get to the hospitals that need them (2).” This advice should be used for all businesses because emergencies affect all business in one way or the other.

The supplies at home improvement stores are also critical in preparation for a hurricane. Home Depot and Lowe’s use a “war room” strategy to respond to the needs of its customers. In a Home Depot war room, the Weather Channel is projected on a large screen, maps on the walls track a hurricane, and phones are connected to many stores in the storms path. Managers track the storm and communicate with the stores to see what is selling out and what needs to be replaced, and how to handle the employees that need assistance (1). This strategy keeps store shelves stocked with the appropriate materials. The decisions makers are all in a central location and can react quickly to changes in the storm’s path or problems at any store. In preparation for Hurricane Frances, Home Depot dispatched 1500 trucks to 130 Florida stores in one week. For Hurricane Charley, Lowe’s shipped 25,000 generators to Florida (1). The response to increased demand during critical times can only be achieved with an efficient, well planned out supply chain process.

After the Storm
To help in responding to natural disasters, Lynn Fritz has formed the Fritz Institute, a nonprofit organization to assist relief organizations with humanitarian-aid logistics. After a disaster, relief organizations are deluged with money, food, and supplies (3). These supplies must be delivered to the “right people at the right places at the right time (3).” Unfortunately, relief organizations are not organized to handle the delivery of these items. Many times foods rot in warehouses and corn arrives too late for planting season (3). Because disasters are very unpredictable, occur in remote places, and needs are unknown, logistics difficulties frequently occur.

The Fritz Institute has spent more than $1 million since 1996 to assist humanitarian organizations such as the Red Cross develop web-based software for logistics purposes. This software automates manual processes, tracks donations, and helps organize relief efforts (3). Fritz says this is only the beginning of the task to study and improve the logistics of relief organizations. He hopes more college students will be interested in this type of field. The business community can also learn from these efforts and contribute its logistics knowledge to the relief community.

As supply chains grow and expand globally, the weather will play an important aspect in planning reactions to supply chain disruptions. Business must be prepared with a plan to respond to these situations. Several companies build weather forecasts into the supply chain as a factor (3). With increased population growth, these events will affect more people and more businesses at the same time. Is your business prepared to respond to its next weather disruption?

References:

(1) Stafford, Leon. Home Depot hunkers down. The Raleigh News and Observer. September 4, 2004.

(2) Anonymous. Preparation helps save supply chain after hurricane devastates parts of Florida. Hospital Materials Management. Sept 2004.

(3) Bonney, Joseph. The ultimate logistics challenge. Journal of Commerce. Dec 2003.

(4) Wheatley, Malcolm. How to beat the heat. Supply Management. Sept 2003.

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