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It’s Time to Dust Off the Disaster Recovery Plan

I'm sure there's no one who isn't shocked and filled with deep sympathy for the people of Japan, in the wake of that nation's horrific earthquake and tsunami.

It seemed to erupt as one of those “perfect storms”: a magnitude 9.0 earthquake and 12-foot-high walls of water born out of a tsunami that traveled halfway across the globe. Then, the explosions and imminent threats of a potential meltdown of a nuclear power plant — despite the three levels of fail-safes put in place to keep this very thing from ever taking place.

In the US, debates over the expansion of nuclear power seem to be moving towards a stance of acceptance, but will very likely heat up soon. Nuclear power opponents will say that threats currently facing Japan show that the development of new reactor sites can never be a safe path for the US's energy plan.

Others will say that continued or even accelerated reactor deployment is the only clean and fiscally responsible option, when the US relies on other nations to execute its national energy plan. They might add that it's at least necessary until wind and solar technology are able to supply adequate quantities of reliable power to the grid.

The issues we examine in our supply chain blogs seem insignificant when compared to debates about nuclear power and the disaster in Japan. Yet recent events should force us to examine the ability of our fail-safe systems to guard against a perfect storm.

In the event of a devastating disaster in our own backyard, do we have the ability to deliver raw materials or assemblies elsewhere, to prevent US companies' production from coming to a standstill? Not all disasters are of the magnitude that the Japan is enduring. Let us be thankful for that. Yet, disasters still occur. Some are classified as “acts of God,” and lesser ones could be the result of mere union disruptions or single-source suppliers not performing as “guaranteed.”

These are trivial compared to the Japan earthquake and tsunami. Please forgive me for making this comparison. But I can't help thinking that as keepers of the supply chain, it is also our responsibility to deliver. It's likely we have all been told that a particular component or raw material is desperately needed when it's nowhere in the world to be had. Yet, we are still expected to have the needed quantity on the dock within three days.

Sometimes, we pass such seemingly insurmountable conundrums up and down the chain, pretending that it's neither our fault, nor our responsibility, if we can't get our hands on it. We then do everything humanly possible to expedite an order for materials that do not exist, figuring that screaming the loudest, threatening the greatest repercussions, or swearing to never to do business with that supplier again will somehow make the needed material appear.

While our recent experiences with allocations and unbelievable lead times have created double or triple orders for the same material from multiple suppliers, we must face the realization that we need a better plan. Isn't it time to dust off the disaster recovery plan, or get busy creating one?

Finding realistic safety stock levels; identifying alternate reliable suppliers for dual sourcing; and maintaining local supply with a distribution partner who can hold stock for you (especially stock from Asian manufacturers who only ship by the boatload, when only a 30-day supply is needed) are all part of a well-thought-out supply chain, disaster or not. When you think about it, it's as if 20 percent of supply chain kinks create 80 percent of supply chain disasters. What would your professional life be if you were able to resolve those kinks before they turned into disasters?

I want to extend my prayers to the people of Japan. I can only hope that those who are in a position to can help minimize the loss and suffering. Consider donating to one of the many disaster relief organizations, such as World Vision and The Red Cross.

9 comments on “It’s Time to Dust Off the Disaster Recovery Plan

  1. Anand
    March 17, 2011

    Todd,

     I agree with the solutions you have suggested like  realistic safety stock levels, identifying alternate reliable suppliers etc. I also feel its important for the companies to start diversifying their supply base geographically. Events like Unrest in Arab, Earthquake in Japan etc makes it even more necessary for the companies to start diversifying their supply base so that in case of any emergency they can easily switch over to the other supplier.

    Most of the Fabs are situated in Japan/ Taiwan which are more prone to Earthquakes. I think its better if we shift couple of those fabs to safer places like India/China.

  2. DataCrunch
    March 17, 2011

    According to Disaster Recovery Journal, 80% of US companies and 90% of European countries don’t have an effective disaster recovery plan.  I wonder how these figures will change in light of the tragedy in Japan.

  3. Barbara Jorgensen
    March 17, 2011

    Tood, thanks for the thoughtful article. It is difficult to balance the demands of business against a human tragedy. We all play a dual role and try to do the best that we can.

  4. Eldredge
    March 17, 2011

    Concern over the health and viability of the supply chain is especially relevant in ths case of a disaster. Perhaps it seems (or is) trivial to be concerned about not interrupting our supply of consumner electronics or new automobiles under such conditions, but it is now vitally important to get the humanitarian and technological resources to the disaster areas i Japan in order to save lives. It is also important to get Japan back on it's feet economically as soon as possible.

  5. Tim Votapka
    March 21, 2011

    Very good article. We've already had at least two wake-up calls of our own on U.S. soil…the unforgettable 9/11 and Katrina. Both were supply chain disruptors to say the very least.

  6. gpbobby
    March 22, 2011

    It seems to me that much of the pain associated with supply chain interruption is a direct result of the just-in-time manufacturing and inventory concept. In the interest of higher profits, each node in the manufacturing chain relies solely upon the node below, to the point that when GM in Detroit needs an ABS chip, someone in a gravel pit half a planet away puts a shovel into the sand… but weeks too late. Maybe we need to revisit the overlooked benefits of supply chain buffering. 

  7. hwong
    March 22, 2011

    It's all about risk preparation. During a crisis, companies with the strongest IT foundation can harness the power of information to control and mitigate the impact of the disastrous event. A collaborative platform delivers critical information to handle the event.  Information is powerful. Having that information will enable the decision makers about the next step. Whoever has the most supply chain resilience will be the winner of such event.


  8. Tim Votapka
    March 22, 2011

    Good points. On an admin level, we push push push to have everyone in the organization drill on contingency plans and policies regularly. With full certainty in place you have no lag or fumbling when things need to shift into high gear. Not too different from first responders and fire department scrambles. Everyone knows full well what they need to do and how it must be done without second thought.

  9. maou_villaflores
    March 30, 2011

    I totally agree with you – Information is powerful. But disaster are unpredictable a good contigency or mitigation plan is a must for every company in case something happens along the way

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