Natural disasters, whether a hurricane, tsunami, or blizzard, will inevitably disrupt global supply chains with delayed or halted deliveries, closed ports, canceled cargo flights, and unbalanced supply and demand.
Depending on the severity of the situation and the level of preparedness, some supply chains may even come to a halt. This frequently has a knock-on effect, as businesses in the affected area may be unable to obtain the supplies they require on time, or may receive fewer shipments than usual. And, of course, this has an effect on the consumer. Rehabilitation takes time, money, and effort.
Recent Natural Disasters That Have Disrupted Supply Chains
Tsunami and Earthquake in Japan
The 2011 Tohoku earthquake and tsunami cost Japan $210 billion and disrupted supply chains around the world. Toyota, General Motors, and Nissan all temporarily shut down facilities in the United States and Japan due to a lack of available parts. Businesses that rely on Just-in-Time (JIT) deliveries in the country were left in the lurch.
Hurricane Maria and Puerto Rico
When Hurricane Maria hit Puerto Rico in September 2017, it wreaked havoc on the supply chains of two of the island’s most important industries: pharmaceuticals and medical devices.
Authorities were tasked with ensuring that critical drugs and medical supplies did not run out, and the effects spread throughout the United States as the storm knocked out many of the facilities in Puerto Rico that make sterile saline bags. Because of the disturbance in the saline supply chain, hospitals were compelled to ration saline, affecting patients thousands of miles distant.
The Effects of Hurricane Florence on the Supply Chain
Supply chains struggled to catch up with the backlog of deliveries as communities began to assess the aftermath of Hurricane Florence.
Employees at both the Port of Morehead, which was forced to delay reopening due to recovery efforts, and the Port of Wilmington returned to work on Thursday, September 20, and commercial truck operations were back up and running by Monday, September 24. Warehouses and other buildings were severely damaged in both locations, and numerous empty containers were destroyed.
Road and rail connections were also impacted, with the most significant trucking disruption occurring along Interstate 95 through the Carolinas. Flooding closed most of I-95 in North Carolina, with the exception of a 9-mile stretch.
Meanwhile, the FDA monitored medical supplies and devices and assisted pharmacies in checking for potential medical device contamination. Devices like glucose meters and digital thermometers that were contaminated could have had serious consequences for people’s health and safety.
Other industries impacted included automotive, agriculture, textiles, and manufacturing, as well as retail and North Carolina’s burgeoning biotech sector.
Hurricane Sandy versus New York City
Hurricane Sandy made landfall in New York, exposing the surprising fragility of New York Harbor’s fuel supply chain. The storm caused nearly every link in the supply chain to be disrupted. International oil tankers were obstructed by water debris, refineries were shut down because of flooding, pipelines and storage depots were halted because of power outages, and tanker trucks were commandeered by emergency services. Finally, power outages prevented fuel dispensing, and even for stations that did not experience outages, obtaining scarce fuel was difficult.
The majority of businesses were woefully unprepared, but a few went above and beyond. The petroleum firm Nustar, which has a terminal in Linden, New Jersey, constructed berms around its tanks and raised essential cables in order to move them away from regions that were at risk of flooding.
However, most energy companies were not as well prepared and thus did not fare as well. Sandy’s surge ended up causing water to overflow berms, lifting partially filled tanks off the ground and spilling fuel.
Creating a Disaster Preparedness Plan for the Supply Chain
Although the long-term impact of natural disasters is difficult to predict, businesses can take a few simple steps to ensure preparedness and a quick recovery.
Make a plan for Natural Disasters Response and Recovery
Take the time to create well-thought-out, detailed guidelines and directions for team members, and ensure that everyone is on board and understands their responsibilities. Investigate backup suppliers and review the plan on a regular basis to identify areas for improvement or changes.
Engage with suppliers and manage supply chain risks consistently
Determine whether or not they have their own disaster response/preparedness plans in place, and what they entail. Creating a supplier scorecard can aid in the analysis of risk levels and potential issues. This will help you determine which third parties will be most beneficial to your company in the event of a disaster.
Recognize the threats to your organization’s reputation
How will your company fare in the public eye in the event of a natural disaster? Will people regard your supply chain as dependable and responsible, putting consumers first, or will they be posting on social media about potentially life-threatening problems they’re having as a result of your poor planning?
If a disaster occurs, ensure that all investigations are thorough and well-conducted
This is an opportunity to learn from past mistakes, identify what went well, and reevaluate your preparedness plans in light of the findings. If a disaster strikes in the future, you’ll be better prepared to deal with it.
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