What’s scary about running a business is the sometimes latent and foreboding knowledge that there are far-reaching effects to everything. As we’ve seen time and again—and especially lately—natural disasters can have the ability to shut us down completely, whether or not we even operate in the hard hit areas.
When most people hear the words “oil spill,” visions of seals and seagulls covered in black sludge come to mind. But I bet I’m not alone in this crowd when I say the words oil spill also make me think of the supply chain ramifications of restricted fishing areas and increased pricing on seafood in anticipation of a shortage.
The impact of this oil spill will surely be difficult for those in the food processing and restaurant industries, especially for those who live closest to the spill. Louisiana—an area that could do without more tragedy—will likely be hardest hit, considering it provides 1/3 of the shrimp, oysters, crab, and crawfish in the country. For food processors without a price lock, this could mean a catastrophic increase in the costs of their raw product. As the banned fishing areas were expanded yesterday by 46,000 square miles, it appears that this industry will take a fair amount of time to become right-sided again.
This is not the only way manufacturers have been affected this month by events in their own backyards. Recent flooding in Tennessee displaced dozens of manufacturers, many of which are still barely beginning to recover. According to The Tennessean, in assessing the damage, these business owners “are finding that the waters drenched industrial machinery, soaked records and swept away chemicals, raw materials and inventory.”
These disasters ought to serve as a reminder to the rest of us that there are numerous things out there that can hop out and surprise us. While it would have been extremely difficult for the folks of Nashville or Louisiana to anticipate disasters of such magnitude, it does raise an interesting discussion: Are your manufacturing customers really prepared for the unthinkable?
Granted, manufacturers can’t foresee every turns of events, or create a completely airtight plan to save everything from every possible disastrous cause. But as the role of the distributor requires an increasing breadth of knowledge relative to industrial uptime, now might be the time to step in with a value-added advice on disaster planning. That said, there are a few things you might add to the discussion when it comes to mitigation strategies:
- Electronic back-ups: Not all disasters are the same, and in today’s web-based society, a technological disaster—like a server meltdown or a network hacker—can mean more problems for your day-to-day business than ever.
- Cross-training: When P&G was hit by Hurricane Katrina, it was able to get its Folgers business back up and running partly due to its consistency of operational processes. According to an interview with ComputerWorld.com, Jake Barr, an associate director of supply network operations at P&G, explained that this meant that personnel from other business lines could step in to help with operations without needing site-specific training. This might be the kind of critical legwork your customers can do in the meantime to prevent disaster-related facility downtime from turning into massive profit loss.
- Business continuity plans: Remaining flexible is critical. Do your customers have back-up production capabilities? And from your standpoint as a supplier: Have you been clear about presenting your capabilities to assist when it comes to production or supply chain disruptions? Do they know (and feel confident in) your business continuity plan in the event of a disaster that effects your warehouses or delivery?
Constructive disaster planning is more than just preparing for the worst—meaning, not just any plan is going to work. The last thing you want your customers to be doing is keeping needless inventory for just-in-case situations. Yeah, it sounds helpful in an emergency, but how much worse would a flood like Tennessee’s be if the customer had an extra million dollars worth of unused inventory on their factory floor?Just keep in mind that disaster preparedness and response is not just something we ought to pay lip service to—and it’s definitely not something that we should shutter in a dusty binder for decades. Odds are your customer’s environment, personnel, production, and technology will change fast enough to keep chasing their disaster response plan into obsolescence if they’re not careful.
And unfortunately, our businesses will always be vulnerable to multiple avenues of attack. Before it reared its ugly head a year or two back, I never envisioned we’d be sending folks home from the workplace over swine flu scares. It’s also a bit alarming to consider how many of us still have teeth marks on us from recent economic disasters—much of which we could do little to pinpoint, let alone prepare for.
But if we’ve survived worse, then we’ve gained a little knowledge from it. In this case, if we can’t save the wildlife in the Gulf, maybe we can keep some manufacturers alive. Here’s hoping we can find a way to wash off all of this oil.Do you have tips on proper planning for a disaster? Email me at email@example.com.