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Logistics providers wary of 2019 hurricane season
Severe weather events have hit supply chains hard in recentÂ years, so as the Atlantic hurricane season looms just two weeks away, manyÂ companies are applying some hard-earned lessons to their logistics operationsÂ in an effort to avoid disruption and plan for a quick recovery from the nextÂ storm.
Traditionally spanning from June 1 to November 30, theÂ six-month span has lately included painful and expensive hits to U.S. roads,Â rails, and warehouses by hurricanesÂ Florence and Michael in 2018, and by hurricanesÂ Harvey, Irma, and Maria in 2017.
To help businesses take steps to minimize that damage, transportation and logisticsÂ providerÂ DHL provides aÂ supply chain riskÂ management platform called "Resilience360" that the company says can help usersÂ to predict,Â assess and mitigate the risk of disruptions.Â The company onÂ March 25 released its firstÂ "Annual Risk Report," listing the top 10 supply chain riskÂ predictions for 2019. Number four declares: "climate change impact heats up," saying that forecasters predict this year could be the warmest year on record, pitting companies against an increasing number of weather-related disruptions.
A forecast fromÂ Colorado StateÂ University's Department of Atmospheric Science backs that up, saying those disruptions are onÂ track in 2019 to includeÂ 13Â named storms,Â includingÂ five hurricanes.
While such massive storms are mighty forces of nature, DHLÂ says companies can use technology to mitigate hurricane risk, since storms areÂ usually detectable three to fiveÂ days in advance through data supplied byÂ weather radar, satellite imagery, and airplanes carrying sensors. "Companies can map their supply chains, see which suppliesÂ are where, and what routes they're using,"Â Tobias Larsson, CEO of Resilience360, said in aÂ May 15Â webcast.Â "Then they can see the predicted path of the storm,Â whether it will impact their suppliers, and note whether those are criticalÂ suppliers, who provide high-volume orÂ high-margin products."
Armed with that model, companies can build buffers of backupÂ capacity so they can continue operating even if inventory flow comes to a haltÂ because of flooding, powerÂ outages, and other impacts. "Many just-in-timeÂ supply chains have very low inventory levels because they are optimized," soÂ they may have to contact alternative suppliers orÂ load some goods into trucksÂ and put their stock on wheels,Â Larsson said. "You can't mitigate 100 percent of theÂ risk, but you can do better than your competition."
DHL applied many of those lessons to its own practices afterÂ Hurricane Maria swamped Puerto Rico in 2017, and the company was scrambling toÂ get its 10 warehouses onÂ the island back up and running,Â EwarÂ Rivera, theÂ directorÂ of operations forÂ DHL Supply ChainÂ inÂ Puerto Rico, said on the webcast. As a provider of third-party transportation and warehousingÂ services, DHL helped its customers build up inventories, so they had enough "safetyÂ stock" to stay in business,Â even though the movement of goods through theÂ region came to a standstill as Puerto Rico was lacking clean water,Â electricity, food, and fuel, he said.
Each DHL warehouse has a business continuity plan (BCP) thatÂ is drafted with input from customers and from providers of crucial servicesÂ like internet, fuel, and water. ManyÂ BCPs also include pre-agreed standingÂ orders, so a diesel vendor will continue to make deliveries even whenÂ communications are down. "We also used catering services toÂ our facilities, soÂ employees could get food while working and even take some home after work," RiveraÂ said. "We were up and running faster than other companies in theÂ area."
The New York-based insurance company Travelers offeredÂ similar advice for companies preparing for the upcoming hurricane season,Â pointing out thatÂ just because aÂ manufacturer is located in theÂ Midwest doesn't mean that the upcoming hurricane season won't impact them.
Far-flung supply chainsÂ mean that essential suppliers, customers, transportation routes, or otherÂ dependencies could be located in high-riskÂ areas, spelling danger for theirÂ clients thousands of miles away from a storm's path, Travelers said. TheÂ insurer provided three points ofÂ advice for businesses planning for theÂ upcoming hurricane season:Â
- have aÂ comprehensive contingency plan in place, including back-up suppliers andÂ alternative transportation routes, and make sureÂ suppliers have back-upÂ plans as well.
- establish anÂ emergency communication plan for employeesÂ and suppliers in case operations are effected.
- prepare to monitor social media andÂ have a transparent response ready to address customer concerns,Â troubleshoot issues andÂ communicate status updates.
Setting priorities beforeÂ the storm hits is a crucial step in hurricane preparation, according to theÂ American Logistics Aid Network (ALAN), aÂ charitable group thatÂ coordinates donations ofÂ logistics goods and services to supplement non-profit organizations' responseÂ efforts following natural disasters.
In a May 14 blog post comparing storm preparation to the safetyÂ pamphlets found in airline seatback pockets, ALAN executive director KathyÂ Fulton advised people to "putÂ on your own oxygen mask before helping others,"Â saying that one of the most practical things you can do to help the cause ofÂ disaster relief is to be prepared to take care ofÂ yourselves and your lovedÂ ones.
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