The Supply Chain Implications Of The Houston Flood
Steve Banker | Forbes
The flood is almost biblical in scale. What could anyone do to prepare for something like that?
Quite a lot, actually.
The bright spot, if you can say this event has any, was that it was forecast. Companies could see what was coming at them several days ahead of time.
Some supply chain disruptions are not predictable. It is possible to have contingency plans in place: If this distribution center goes down, for whatever reason, we will fulfill orders from these customers from this warehouse and orders from these customers from this warehouse.
Any good supply chain team has these kinds of contingency plans in place. These bibles can be hundreds of pages long and designate who will be doing what, chains of escalations and how shortages of supply will be allocated across customers.
But it is always better to be warned. Great supply chain teams not only have contingency plans in place, they practice them. The nice thing about being warned is that even teams that are not great get a chance to prepare, and even practice.
Some companies profit from these kinds of events. Walmart and other big retailers know that with these kinds of storms bearing down on them, consumers stock up on bottled water and other essentials. These retailers see the storm, and their flexible supply chains work to get the goods that will be in great demand into the stores.
Companies can profit in other ways. Strong supply chain teams have done an end-to-end mapping of both their supply chains and competitors’ supply chains. This mapping involves includes hard-to-source components that are manufactured in that part of Texas. If this component is used across the industry and you can get a rush order into one of the few other manufacturers of similar parts before your competitors, your business takes less of a hit than your competitors.
And if your competitor has a key distribution center or plant in that part of Texas, a company knows their goods will be in short supply. Prices tend to go up in that kind of situation.
Finally, there are nonprofits that have specialized in supply chain emergency relief.
There is a whole science to this part of the profession. At a time like this, our gratitude goes out to these organizations.
The information contained in this publication is intended for general information purposes. No representation is made that the information or references are complete or remain current. Click here for Grainger's full legal disclaimer.