If supply chain managers have time to organize a staff picnic this summer, they should not forget about Alex, Bonnie, Colin, Danielle, and Earl—even though these seasonal visitors have the potential to spoil the party.
The World Meteorological Organization has queued up these and 16 other names to identify the tropical storms and hurricanes that are forecast to hit the U.S. Atlantic and Gulf coasts this season. Indeed, as this blog was being finalized, the National Hurricane Center gave a storm hitting South Florida a high chance of becoming tropical storm Alex.
For the rest of the Atlantic hurricane season, which began June 1 and continues through November 30, NOAA is putting a 65% probability on above-normal activity. The agency predicts up to 21 named storms, six to 10 hurricanes and three to six major hurricanes, the latter distinguished by sustained winds of 111 mph or higher. The increased hurricane activity is attributed to the ongoing La Niña, warm sea surface temps in the Atlantic and Caribbean, weak tropical trade winds, and an enhanced African monsoon season.
How this season will compare to 2017—the costliest Atlantic hurricane season on record—is impossible to predict. But strategies to increase supply chain resilience to extreme weather can be quantified with greater confidence.
From a supply chain risk standpoint, preparing for tropical storms and hurricanes begins with sub-tier visibility, specifically a comprehensive map of supply chains down through multiple tiers to identify every factory, storage facility and logistics node that handles a company’s parts and materials. It can’t be stated too often that most supply chain disruptions (80%) occur in the lower tiers—the suppliers to suppliers.
Specific to tropical storms and hurricanes, analysis of past disruption data can identify the links in a supply chain most vulnerable to future weather events. Resilinc’s data of these types of disruptions shows that those suppliers most seriously disrupted by extreme weather are often those who lack robust business continuity plans.
One Resilinc survey of suppliers’ business continuity plans revealed that 37% had no backup power and 73% had no satellite phone—both of which are essential to continuing operations and communicating with customers during the power outages that are frequently caused by heavy storms.
When an OEM customer learns that a critical supplier lacks such important emergency resources, they can offer incentives to the firm to invest in backup power generation and a satellite phone. (For more on collaborative risk management in supply chains, see this post: Why Supplier Collaboration is a Win-Win Strategy.)
Some Resilinc customers have used their Resilinc supplier risk management tools to create standards for suppliers in hurricane zones and even agreed to pay more for raw materials in exchange for the supplier investing in risk-mitigation measures.
Even with the best advanced preparation, some supplier firms and logistics routes will remain vulnerable to extreme storms. So, supply chain managers should tune up their capabilities to respond and adapt to weather disruptions as they unfold.
AI-enabled predictive analytics services such as those offered by Resilinc offer probability-weighted predictions for what suppliers and parts could be disrupted during a hurricane and risk mitigation measures such as procuring threatened supplies from other sources.
No one can be sure whether Fiona, Gaston, Hermine, Shary, Tobias, and others turn out to be relatively minor storms or disasters on the scale of hurricanes Harvey, Irma and Maria. What is more certain is that those companies that invest in robust supply chain risk management will see long-term return on investment.
For more, watch our webinar: Using AI and Predictive Analytics for Hurricane Preparedness