Whether facing a hurricane, tsunami, or blizzard, any kind of natural disaster will inevitably disrupt global supply chains with postponed or paused deliveries, closed ports, canceled cargo flights, and unbalanced supply and demand.
Depending on the severity of the situation and the preparedness surrounding it, some supply chains even come to a complete halt. This often creates a ripple effect, as businesses in the affected area may not be able to procure the supplies they need on time or may receive fewer shipments than normal. And this, of course, ultimately impacts the consumer as well. Recovery can be time-consuming, expensive, and arduous.
Examples of Recent Natural Disasters that Disrupted Supply Chains
Japan Earthquake and Tsunami
The 2011 Tohoku earthquake and tsunami resulted in $210 billion in costs for Japan and affected supply chains across the globe. Unable to ship or receive needed parts, Toyota, G.M., and Nissan all temporarily shut down facilities in both the United States and Japan. Businesses reliant on the country’s Just-in-Time (JIT) deliveries were left in a lurch.
Puerto Rico and Hurricane Maria
When Hurricane Maria hit Puerto Rico in September of 2017, the supply chains of two of the island’s biggest industries — pharmaceuticals and medical devices — were ravaged.
Authorities were tasked with ensuring critical drugs and medical supplies didn’t reach dangerous shortages, and the effects spread the United States as well, as the storm knocked out many of the facilities that make sterile saline bags in Puerto Rico. Hospitals were forced to ration saline, with patients thousands of miles away from the hurricane feeling the effects of the supply chain disruption.
Hurricane Florence’s Impact on the Supply Chain
As communities began to assess the aftermath of Hurricane Florence, supply chains struggled to catch up with the backlog of deliveries.
North Carolina’s Port of Morehead, which had to delay reopening for recovery efforts and the Port of Wilmington resumed all commercial truck operations on Monday, Sept. 24 after employees returned to work on Thursday, Sept. 20. Both locations saw significant damage to warehouses and other buildings, and numerous empty containers were downed.
Road and rail connections were affected as well, with the biggest trucking disruption along Interstate 95 through the Carolinas. With the exception of one 9-mile stretch, flooding kept most of I-95 in North Carolina shut down.
Meanwhile, the FDA kept a close eye on medical supplies and devices, and assisted pharmacies in checking for potential contamination of medical devices. Any contaminated devices, such as glucose meters and digital thermometers, would have posed serious safety and health risks.
Other industries that were impacted included the automotive, agriculture, textiles, and manufacturing sectors, as well as retail and North Carolina’s up-and-coming biotech industry.
Developing a Supply Chain Disaster Preparedness Plan
Although the ultimate impact of natural disasters is hard to predict in advance, businesses can take a few simple steps to ensure preparedness and speedy recovery.
- Create a disaster response and recovery plan.
Take time to develop well-thought-out, detailed guidelines and directions for team members, and be sure that everyone is on board and familiar with their duties. Look into backup suppliers and review the plan regularly to identify areas for improvements or adjustments. - Engage with suppliers and practice consistent supply chain risk management.
Find out if they have their own disaster response/preparedness plans in place, and what they entail. Creating a supplier scorecard can be helpful for analyzing risk levels and potential problems. This will guide you in determining which third parties are most useful for your business in the event of a disaster. - Understand the risks facing your organization’s reputation.
In the event of a natural disaster, how will your business fare in the public eye? Will people look upon your supply chain as reliable and responsible, putting consumers first, or will people be posting on social media about the potentially life-threatening issues they’re experiencing as a result of your poor planning? - If disaster does strike, make sure all investigations are thorough and well conducted.
This is an opportunity to learn from mistakes, identify what was done right, and reassess your preparedness plans in relation to the findings. If a disaster occurs in the future, you’ll be better able to take it on.
Hope for the Best, Prepare for the Worst
No one enjoys thinking about worst-case scenarios, but when dealing with natural disasters, proper planning and recovery processes are critical for ensuring resiliency in your supply chain.
Since these catastrophic events are unpredictable, companies across the country — and across the globe — should regularly reassess their disaster response plans, analyze risks, and, should the worst occur, determine the most important third parties for rebuilding and recovering.