By the time Hurricane Yolanda swipes Puerto Rico she has become a Category 5 storm with sustained winds above 160 miles per hour. The island of Hispaniola (Haiti and the Dominican Republic) is hit dead-on. Mudslides, upland flooding, and tidal surge claim hundreds of lives and there is widespread destruction of housing, commercial property, and critical infrastructure.
Two days later (10 days before Zachary's landfall) Yolanda tears ashore near Boca Raton, Florida as a Category 4 storm. The Miami metropolitan area is hit harder than ever before in its recorded history. As Yolanda proceeds west she weakens, but spawns at least ten tornadoes. By the time the tropical storm system enters the Gulf of Mexico she is blamed for the deaths of 158 Floridians. Over 400,000 are homeless. Power, water, and transportation systems have suffered catastrophic failures in what is widely perceived as the most devastating hurricane in US history.
Tropical Storm and Hurricane Yolanda (prior to Zachary)
But Yolanda is not finished. In the Gulf of Mexico she reorganizes and moves Northwest, coming ashore between Abbeville and New Iberia, Louisiana as a Category 3 Hurricane (111-129 mph sustained winds). Fifty-two more die. Fifty-thousand more are left homeless. Seven major refineries are taken off-line, initially by controlled shut-downs and then due to significant damage. Tornadoes and flooding extend across inland Louisiana, Arkansas, Mississippi, Alabama and Tennessee.
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How do the consequences of Hurricane Yolanda impact your mid-Atlantic capacity and capabilities?
ReplyDeleteIs there an impact on sourcing?
Is there an impact on demand?
Is there an impact on transportation?
Is there an impact on personnel?
Are there other impacts?
In the real-world you would not be certain that Hurricane Zachary will follow Hurricane Yolanda. Does that have any influence on how you respond to Hurricane Yolanda?
Please indicate which part of the supply chain you are discussing (e.g. Water, Food, Pharmaceuticals, Medical Goods, Trucking, Fuel or other.)
Is it possible to distribute food to response crews? Restaurants closed/questionable with power outages. Water is welcome, but lunches are needed at sites where recovery work is occurring.
ReplyDeleteWe have several customers in South Florida. Sounds like they have been hit hard and we will lean-in hard to restore operations. Both national and regional business continuity teams will be activated. Given the catastrophic situation described, will probably focus on bottled water and non-perishables. We have hurricane pre-selects in the inventory system and will begin moving what we can when we can.
ReplyDeleteSo, I get it that we can't know that Zachary is still-to-come, and this late in the season we might decide something this big justifies moving everything we can and losing in any reserve.
In any case, what Yolanda means is this week lots of our best people won't get much sleep.
A lot depends on what happened to inventory and existing capacity in Florida and the Gulf Coast. If our distribution centers and trucking resources are still operational, it's going to be tough but we can adapt. But if we lost one or more DCs... we could be a long time coming back,
ReplyDeleteIs there an impact on sourcing?
ReplyDeleteSouring product for consumers and commercial organizations will increase naturally as the storm progresses to land fall. In addition, without hurricane preparedness (supplier) agreements (Business Continuity Plans BCPs) pricing will sky rocket leading to alternate suppliers that may have product and/or supplies at a different standard and/or specification than normal. Distribution channels will could be clogged so forward buying of critical items must be a strong consideration. Critical items such Water, Generators, Fuel, Vehicles, Satellite Phones, Batteries, First Aid Kits, and Dry Ice are just a few items that should be considered within a hurricane kit. Plan to have suppliers located outside the strike zones so you will have the ability to pull product in and not have your primary suppliers (local) impacted too.
Is there an impact on demand?
Moreover, supply and demand will prove challenging without proactive movement of product to forward areas in the supply chain. Depending of the type of products (perishable) you will have to consider sustainable power (shelf life) in order to protect those sensitive items. Which leads concerns of costing and the rising exposure of the bullwhip affect. Security will pose a problem pilferage and damage are often area of concern as forward areas to strike zones offers unwanted opportunities for stake holders. Placing strong checks and balances in addition to inventory control are vital.
Is there an impact on transportation?
Supplies/freight inbound to potential strike zones could be costly if you have carriers willing to transport product. Timing is very important to transport critical shipments within a window that transportation providers can remove their assets from impacted areas. In addition, commercial carriers pricing could be inflated if FEMA (Any Government Entity) pays a higher transportation fee to move similar items. As a result price elasticity could be a detriment for private sector organization to move the same product within the same distribution channels. This scenario will exposure organizations to higher sales (demand) with lower margins based on increased transportation/operational cost. After the storms hits it is important to have local carriers that will resupply areas until full capacity is restored.
Is there an impact on personnel?
Personnel living quarters are important coupled with the means of communication and basic living supplies. Qualified personnel are highly sought after therefore retention and job security are paramount for emergencies such as this one. Shift durations and work/life balance are important as the storm approaches and after the storm lands. It is important that personnel have clear objectives and concise expectations during the storm exercise.
Are there other impacts?
TBD.
Pharmacy business is way up as people attempt to get their needs for the next several days met.
DeleteCan you give any more details on power restoration and physical damage in South Florida?
ReplyDeleteWhen the exercise moves to the mid-Atlantic there will much more detail than here. Yolanda is being used to set up some tough preconditions for the mid-Atlantic event.
DeleteBut since you asked:
1. Assume up to 80 percent of metropolitan Miami and Ft. Lauderdale will be without commercial power for significantly more than ten days. Twenty-three days after Katrina, seventy-five percent of Louisiana customers had been restored when Rita hit and knocked many off again.
2. Physical damage depends on the specific location and age of your structures (especially related to construction code applied). But in the aftermath of Katrina, New Orleans lost 15 of its 38 grocery stores. So you might estimate at least a one-third loss of retail operations. Distribution Centers are too site-specific for a generalist like me to estimate. Any suggestions from the experts in this group?
Supply chain is affected as produce from the south is stalled. Stores may need additional help with ice, dry ice, canned goods, paper products, etc.
ReplyDeleteWe have several clients in South Florida and the Gulf. Prior to a hurricane of this magnitude we would have:
ReplyDelete1. Staged and surged critical supplies outside the predicted impact zone.
2. Staged key personnel and equipment outside the predicted impact zone.
3. Established and confirmed primary and back-up communications with key personnel and a communications-tree system for all personnel.
In the immediate aftermath of impact we would:
1. Assess situation especially in regard to personnel safety.
2. Assess where customers can and cannot restore operations in the next 48 hours.
3. Work with customers to confirm or alter pre-scheduled post-hurricane orders
4. Assess and develop work-arounds related to roads, bridges, and other transportation issues.
5. Typically the preceding steps require 8-to-12 hours in an especially bad storm, but once we know where we can go safely and actually get through, we are ready-to-roll.
Multi-product Trucking Continued
ReplyDeletePS: In our case, I don't think we would "over-commit" even to an event like that described in South Florida and the Gulf. The reality is we will not divert resources that clients in other regions need to continue operating at full capacity. If we have any over-capacity somewhere, we might send into Yolanda's path. But we are already stretched in the mid-Atlantic, so nothing would be sent from here.
I don't know enough about South Florida pharmaceutical operations to be sure, but I'm worried that the situation described (400,000 homeless! and probably more evacuated and not able to get home soon) will produce a pharmaceutical nightmare. Lots of pharmacies out of operation. Lots of chronic condition patients without scripts and unable to contact their prescribing physicians. Sounds like a huge potential secondary effect. Any pharma specialists able to ally my concerns? If this concern is accurate, there could at least be some hoarding behavior in the mid-Atlantic (especially if a hurricane prediction is released) and with or without hoarding there could easily be spot shortages as the system tries to supply South Florida.
ReplyDeleteIn an emergency situation, the Maryland Board of Pharmacy maintains a list of pharmacies that are open and operating. This information is provided to Maryland Emergency Management. Patients, who have lost their prescriptions may get a small supply of most chronic medications at any pharmacy.
DeleteNot directly responsive to your questions, but I think relevant to the overall purpose here: What you have described in Florida and the Gulf Coast is pretty close to a "maximum of maximums" for federal response capacity. Even given the world class state and local operations, especially in Florida, Yolanda will still be seriously stressing the federal system when Zachary comes ashore. So maybe the private sector has some excess capacity, but I don't think much will be left at the federal level.
ReplyDeleteEspecially this week and the last two weeks.
Delete1. Is there an impact on sourcing?
ReplyDelete-Regional Purchasing Managers will be directed to make contact with all Mfg'ers located in the storm path to either ship product out early and stock pile or locate alternative locations to source from.
-Substitute products from alternative vendors will be contacted and prepped for possible shipment.
2. Is there an impact on Demand?
-We will ask hospitals to update their Emergency Orders and we hold for release in the event EDI Systems are non-functional.
-N95 Masks, Gowns, Gloves, IV Solutions, etc...are predicted to be in high demand and sister DCs will be used to help support surge.
-Mfg'ers will most likely limit availability of supplies as demand increases or Gov't requests.
3. Is there an impact on transportation?
-FT Lauderdale DC will most likely be inoperable it the path is as predicted (use Jacksonville and Gainesville).
-Local Teammate/Family safety is paramount, therefore SWAT Team deployment from surrounding areas will be set up to operate the DC if local teammates cannot leave homes/family.
-If the DC could be inoperable, trucks and trailers would be moved to neighboring to be loaded and driven into impacted area.
-Hotel rooms to be coordinated for local teammates or SWAT Team.
-Command Center would have mapping program completed that plots all customers addresses & teammate addresses with impacted roads via Google Maps to identify impacted teammates and best travel paths to customers.
4. Is there an impact on personnel?
-Teammate emergency contact lists would be used and reported back to Home Office notifying of any emergency situations.
-SWAT Team to be coordinated by Regional Ops Directors & GMs.
-Decision to open the DC or move pick/ship operations to another DC would be determined by GM/RDO.
-Currently testing a companywide/Regionwide Emergency Alert system similar to college campuses for instant teammate communication.
5. Other impacts?
-Credentials for roadway passage.
-Fuel Supply for Generators/trucks.
-Computer/Phone systems to operate via satellite.
6. Only influence on Zach following Yolanda is whether operations are worth restoring in the impacted area or do we continue to operate from neighboring DCs.
Med/Surge Distribution:
DeleteThanks for the detail. A question: Do I correctly understand that since the regular personnel associated with your Florida DC's might not be able to get into work some of your mid-Atlantic personnel might be shifted to Florida to restore/manage operations?
The biggest potential impact I foresee on the mid-Atlantic, from where I sit, is on the fuel supply. You say most of the Gulf Coast refineries are offline. That's where we get the majority of our gasoline and diesel. Unless those refineries come back on soon we will be pinched bad here, probably within five days.
ReplyDeleteIs it possible that we could always institute a ratioing system early when these types of events occur -- so that hording is not a problem? What would we have to do to make that happen?
ReplyDelete-Miami and Louisiana DCs have full generator back-up, so should be up and running even if street power is not available
ReplyDelete-Will most likely experience a sharp increase in inbound and outbound volume for the month following the hurricane
-Increase in volume plus the potential impact to local workforce would mean we would be bringing in 3rd party or SWAT warehouse workers to support the business (potentially from the Mid-Atlantic)
-We would be distributing key items like ice and water ahead of the storm and would also continue to ship large quantities of these key items post-storm
-Manufacturer supply of key storm items would be tight in the weeks following the storm, which would probably impact supply across the country, including in the Mid-Atlantic
-Our transportation would need to be supplemented with 3rd party or SWAT drivers
-We would be looking to secure additional transportation equipment, which would potentially take away some capacity from other parts of the country
-Diesel fuel shortages across the country if refineries are impacted; we would be trying to get as much fuel as we could
-We would potentially be supporting our customers' stores with extra deliveries and extra reefer trailers in the event they lose power, which again adds to the stress on the supply chain
-We would potentially be transferring product from other facilities to support the volume needs
-Transportation of product to the stores post-storm would have some challenges due to road closures and road blocks, however we would be able to get any placards needed and would do everything we could to get on our regular delivery schedules to the stores that are open