Natural Disasters: Planning for the Unthinkable

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

The horrific images of the earthquake and tsunami in Japan are a reminder of the wrath nature can deliver without notice. Yet, while incomparable to the devastation in Japan, this isn't the first time we've been reminded of such in recent months. In the last 12 months, events like the Icelandic volcano eruption and the oil spill in the Gulf of Mexico have had a far-reaching impact. Disaster preparedness has is a front-and-center business concern as today's supply chains become more susceptible to global crises and events.

Here are four things you can do today to mitigate or lessen the impact of unplanned events on your supply chain:

Increase supplier diversity: Increase the number of supplier relationships within your supply chain, and find a healthy balance between local versus global suppliers. The cost differential may prove to be null the next time a crisis event occurs. You may even realize transportation savings by sticking closer to home.

Be prepared for mode flexibility: Be prepared to use delivery methods that are unconventional to your operations, like Air Freight, Next Flight Out or Ocean. Also, remember that different modes and service delivery levels can often equate to the same result. For example, a ground shipment may arrive in the same amount of time as a 3-day air shipment. Be flexible and stay informed of contingency options.

Stay up to speed on import fees and the legal and political landscape: The transport of goods across international borders requires knowledge of specific trade regulations, import fees and political challenges. In a crisis/disaster situation, expedient action is required – which doesn't afford you the time to become proficient in these areas. If you can't immediately navigate the complexities in-house or through your suppliers, contract a third-party expert to assist. Have these relationships in place before disaster strikes.

Create contingency plans for internal threats: Natural disasters and political upheavals aren't the only threats that require preparation. There are plenty of internal threats that you have limited control over, such as strikes, breakdowns and stock outs. Anticipate these and plan for them in your supplier relationships and operational processes.

To help relief efforts in Japan, please text "REDCROSS" to 90999 to make a $10 donation to the American Red Cross.

- John Haber, EVP of Transportation, NPI

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