Spend Matters US on Hurricane Harvey and Supply Chain Impacts

Houston may seem a long way away for many of us, but pictures of the incredible flooding have shown the terrible effects of hurricane Harvey, and of course we send our best wishes to everyone affected personally.

There will also be a whole range of both direct and knock-on effects to global supply chains, so procurement and supply chain managers are presumably already looking at the impacts and what can be done to manage and mitigate the risks. To help that process, our colleagues at both Spend Matters US and Metal Miner have produced a number of useful and interesting articles which are well worth reading.

In Post-Hurricane Harvey, 3 Supply Chain Risk Mitigation Strategies to Keep in Mind, Taras Berezowsky looks at how critical water supplies will be (somewhat ironically) as the region looks to recover. He also looks at the impact when premises are flooded, speaking to Resilinc CEO Bindiya Vakil.

“We can expect that if factories have [any sort of] water dependency, there’s going to be extended disruption,” Vakil said. “Even if your suppliers are telling you they’re experiencing minimal impact, their essential infrastructure may not be available.” Equipment, for example, may not only need to be replaced, but depending on the complexity and specific qualifications of the products, manufacturers may need to consider test runs for QC purposes, among other steps.

Buyers also need to verify what suppliers are telling them about likely disruption. Suppliers may give positive answers either because they don’t want to let down customers, or because they fear for their own business.

Taras also conducted a Q &A session with riskmethods' Bill DeMartino, general manager of North American operations, and Heiko Schwarz, the firm's founder and managing director. This is really good stuff; here is just one of the half a dozen key questions (and answers).

"Any parting thoughts on how organizations can better prepare the next time a hurricane hits a key shipping center such as Houston, specifically?

Well, this is a big question as there are many different risk mitigation approaches that can be enacted by organizations. First and foremost, enterprises must understand where the risk is and the potential impact. This information feeds into an overall strategy for a category, including understanding the risk appetite. In the end, it’s not about the event but the impact, your appetite for the disruption, your willingness to reduce that impact by enacting various approaches (such as on-boarding additional supply paths, inventory, etc.) — and then your ability to sense and respond".

Another Spend Matters US article titled Hurricane Harvey Disrupts Supply Chains: Resources for Procurement includes a list of useful historic articles and research papers from Spend Matters on risk topics, including our recent UK paper for riskmethods - Supply Chain Risk – Getting To Grips With n-Tier Visibility

And finally, our sister website, Metal Miner, looks at the likely impact on metals pricing and availability and related issues following the events around Houston, with these two articles:

On Top of Humanitarian Crisis, Hurricane Harvey Leaves Lasting Economic Impact

Steel Price Forecast, August 2017: Steel Market Update Recap

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