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COOL INSIGHTS

DISASTERS HAPPEN.

HERE’S HOW TO WEATHERPROOF YOUR SUPPLY CHAIN

I Abe Eshkenazi chief executive officer Association for Supply Chain Management

Severe weather in one part of the world can affect your supply chain from thousands of miles away. Here’s how to protect your business.

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n March 2019, the Midwest was flooded for weeks. A “bomb cyclone” caused more than 1 million acres of cropland to be destroyed. The flooding was swift, long-lasting and without warning—the damage cost about $3 billion, according to a Reuters analysis of government and satellite data. And, that wasn’t the end. The U.S. Department of Agriculture found that 2019’s spring rains stopped U.S. farmers from planting on 20 million acres of farmland, hindering many parts of the world’s food supply chain. Few events can devastate a supply chain faster than disastrous weather. Other business risks— such as cybersecurity breaches and product recalls—can be mitigated or prevented by a risk management program, but disastrous weather and natural disasters are generally unavoidable. They ravage businesses and their supply chains with little warning. What’s more is, many businesses don’t plan for weather-related disasters. A report from the Met Office, UK’s national weather service, found that half of UK companies say that weather is one of three external factors that drives consumer demand, but only one-third of these companies don’t use meteorological data to assess risk in their supply chains. This is a mistake. These busi-

FOOD LOGISTICS | APRIL 2020

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nesses are leaving themselves open in recorded history, killing 86,000 people and forcing more than to prolonged disruptions, critical stockouts and escalating costs amid 500,000 people to evacuate their a disaster, potentially losing millions homes. The disaster also harmed businesses in Japan and across the of dollars. world, hitting its supply networks While we know when it will be with $210 billion in costs. hurricane season, when the weathWe can hope a disaster of this er may dip into extreme cold, or when it might rise into intense heat, magnitude won’t happen again, but we can’t control the whims of we can’t know when a supply chain Mother Nature. will be hit by a disaster. Flooding, Thus, we should earthquakes prepare ourselves, our and tornados employees and our often hit withsupply chains for largeout so much scale natural disasters. as a moment’s One way to prepare is warning. Today’s of corporations don’t check to look at reports on forecasting their supply sites for exposure past disasters, read technology to natural disasters, leaving the about what other can predict businesses at greater risks for businesses have done how much rain disruption and loss of money. well (or poorly) and identify what actions there will be, what the weather will be and where are necessary for the business amid disaster. storms are headed, but it fails to alert the industry of advanced 1. Develop supply notice of disasters. Looking at the chain visibility history of these disasters can help companies better weather-proof Managers must have visibility of supply chains. their entire supply chain. With visibility, they can evaluate their suppliLessons from Japan ers’ risks of being affected by a natIn March 2011, the northeast coast ural disaster. This evaluation must of Japan was hit by an 8.9-magnigo deeper than tier-1 suppliers— managers should also be aware of tude earthquake followed by a tsunami. The disaster was exacerbated where their second- and third-tier suppliers are located. By taking this when a nuclear reactor in Fukushistep, companies can know the risks ma melted down. It was one of the held by each of their partners and worst weather-related disasters

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