Supply Chain in Natural Disaster: How to Handle It Right

Supply Chain in Natural Disaster: How to Handle It Right

Natural disaster does not only affect the world’s economic bottom line but also leave impacts on supply chains. Tsunami in Japan and floods in Thailand are examples of natural disasters that had a much wider indirect economic effect as both caused severe disruption to the global technology supply chain. Thai floods also led to a global shortage of computer hard drives that sent consumer prices skyrocketing until factories were able to get backups. The Tsunami in Japan forced car manufacturers to shut down production at factories throughout the U.S. and Europe. Snowstorm is also the reason behind transportation delays and supply chain worries.

See also: The Impact of Tariff Uncertainty on Logistics & Supply Chain

That said, ensuring your supply chain business prepared for potential natural disruption is vital. Not only do you need to make sure the internal effects of a disaster, but you should also think of your external factors such as the consumer. Therefore, your disaster planning should consider both the infrastructure and after-effect of the events. Here’s how you should build the plan.

1. Create a disaster preparedness plan

Outline all types of weather and natural disasters your area is most susceptible to, but don’t limit to your area only. You should also list all the weather and natural disasters on your supply chain destination countries. Doing this, you can design a point group whose job is to monitor and manage disaster only. 

2. Look for partner

Be sure to ask companies you partner with for their disaster plans to ensure alignment with risk. A partnership is also needed to help you in tough situations. For example, your supply chain has failed to send goods to consumers, thus, your partner can replace you. In addition, your partner can help you ramp up production and find capacity elsewhere, or explore how to reroute shipments, mix modes, access capacity, and expedite transportation to meet demand.

3. Remind transparent and flexible

Unexpected disaster can be a huge barrier between you and the clients. However, if you remain transparent to consumers, you can ensure their satisfaction despite what happens. Be open with members of your team, companies you partner with, and your target customers. Then, think about substitute workspaces and methods of transport for your goods.

Read also: Driver Shortage: How Does It Affect the Supply Chain Industry?

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