Weatherproofing the Supply Chain

Jun 14, 2006 8:39 PM  By

The first of June ushered in the 2006 hurricane season and Florida has already weathered a tropical storm alerts. Hurricanes and other natural disasters can cause chaos, product shortages and suffering when they occur. Supplies are often short in disaster areas, with customers frantically searching for essential items. But the adept use of sophisticated information tools helps marketers and suppliers to moderate the effect of natural disasters by “weatherproofing” the supply chain. That means diverting product shipments, placing inventory in forward locations, and anticipating potential spikes in demand.

Atlanta-based supply chain solutions provider Manhattan Associates offers the following tips for careful disaster planning and logistical efficiency to help ensure that the right supplies are in the right place at the right time:

1. Ensure that the marketer, carrier, and supplier have the same real-time information. Information transparency is critical to providing visibility into the movement of product and understanding the impact on operations. In a weather-related crisis, a marketer is likely to face disruptions in receiving products allocated to, from, or through affected areas. Accurate product tracking and visibility into the procurement/distribution process enhances the ability to locate products at any point in time and in the supply chain.

2. Implement intelligence and responsiveness tools to anticipate and quickly react to changing demand. Marketers and shippers need to achieve true responsiveness in order to sense, react to, and shape customer demand. Product movement intelligence tools, such as RFID, allow marketers to reallocate product out of harm’s way and help maintain top line profits even during an emergency. These tools also provide visibility into product shipments and costing structures. Responsiveness tools provide companies with the ability to anticipate demand changes and intelligently react to them in emergency situations.

3. Drive the supply chain by using a single point of demand. The best approach to sensing and reacting to shifting demand is to drive the supply chain by using a single point of demand. Establishing a single point of demand, rather than trying to forecast with information from several sources, leads to greater demand visibility because time is not wasted reconciling information from different units inside the company. This is particularly important in emergency situations, such as natural disasters, because it allows companies to respond quickly by scheduling people effectively and planning for asset replenishment back through the supply chain.

4. Develop programs that allow for demand-shaping scenarios. Demand shaping is an essential feature for weatherproofing the supply chain. If a disruptive event such as a major storm is predicted in one area, marketers need the ability to increase sales at other locations to protect top line profits. That may include developing an unscheduled promotion and diverting certain nonessential products from the storm-affected area to the location where the new promotion will take place. To be able to shape a scenario like this, marketers must know the true costs of and delivery times for product in the supply chain. They can then “shape” demand based on the supply chain’s capacity constraints, which differ for each company.

5. Establish careful disaster planning in advance to achieve logistical efficiency. The effects of hurricanes and other natural disasters, while devastating, can be mitigated through good planning and a responsive supply chain. Using advanced planning and information tools, marketers and suppliers can ensure the supply chain will withstand and respond to the dislocations caused by such events, thereby achieving true responsiveness and information transparency vital to maintaining top line performance.