9/28/04
Supply
Chain Disruptions
Written
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 peoples 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 Lowes 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 storms
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, Lowes 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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