Supply chain strategies for weathering big storms

"Be prepared" is the slogan of those companies that were least disrupted by Katrina.

By Staff -- Modern Materials Handling, 10/1/2005

"Hurricane Katrina – the name will forever be synonymous with destruction and business interruption. Yet, despite news of inept governmental assistance to displaced citizens, many private supply chains were better prepared to handle the chaos that ensued immediately following the vicious storm.

"The private sector has proven a lot more resilient than the public sector," says Dr. Yossi Sheffi, an MIT professor and director of the MIT Center for Transportation and Logistics. "Companies like Wal-Mart and Home Depot were able to pre-position themselves before the storm hit."

And they were not alone. Dr. Sheffi tells Modern that many larger companies—those with vast financial and logistical resources—were able to weather the wind and rain by relocating inventory and developing contingencies prior to Katrina's landfall. Sheffi conceded that some companies not having the financial resources of a major corporation might not have been as well prepared.

Such "pre-poistioning" also paid off for CVS's supply chain. Kevin Smith, senior vice president of supply chain and logistics for the pharmacy chain, explains that despite a spike in demand for commodity items—water, batteries, diapers—his company was able to meet consumer needs. "High demand items were staged in our DCs and were ready for shipping prior to the storm," he says.

While retailers worked one end of the supply chain, materials handling suppliers worked from the other, supplying companies with much needed replacement equipment.

Joe Ritter, director of marketing and project manager for Crown, told Modern that the lift truck supplier is doing its part in cleaning up the storm-ravaged bayou. Addressing the obvious need for the equipment, Crown has deployed what Ritter calls "the nation's largest used equipment fleet" to the area.

"Companies and distribution centers are still assessing their damages and determining what they need." He adds that a major national retailer has sought out Crown's rental fleet and is currently utilizing the equipment in the aftermath. "We are in a great position to support partners in their short term need."

Much the same can be said of Intralox, which was one of the materials handling equipment suppliers most affected by the storm. The company reported that it had resumed operations to 95% capacity just two weeks following the storm. The company's Harahan, La.-based DC is located a mere ten miles from New Orleans. Edel Banks, president of the conveyor belt manufacturer, says that the company was prepared for the fierce winds and rain, but did not anticipate the inability to contact employees of their DC.

"Our main contingency plan was developing an IT center and customer service center in Baton Rouge," Banks explains. "We didn't anticipate communications to and from Baton Rouge being knocked out but they were." Banks also notes that the company was able to keep more of their inventory safe overseas in their Amsterdam facility.