The 2020 Mid-Year Economic Update_long

2020 About to Strike Again

For the last six months, distributors have been dealing with an unprecedented disruption to their sales and business operations. The abrupt arrival of hurricane season is another reminder of the need for robust supply chain planning and an airtight disaster mitigation plan.
Supply Chain Planning

As if distributors on the Gulf Coast didn’t have enough to worry about with the ongoing COVID-19 crisis, now Hurricane Laura is barreling toward them with the potential to shutter their operations and distribution centers for weeks or longer.

Because, you know, 2020.

If anything good comes out of the pandemic in the coming days, it’s how COVID-19 prepared companies for the potential devastation. Many have implemented remote work environments, so the impact may not be as severe as when Hurricane Harvey blasted the area in 2017. Businesses across all sectors, including wholesale distribution, have ensured that staff meetings, sales calls and customer service can be handled virtually.

But it’s hard to predict how much and what kind of damage Laura will inflict on the region. The hurricane could cause $6 billion to $18 billion in economic loss, according to Chuck Watson, a disaster modeler with Enki Research. Some ports are already closed — Port Houston announced that its terminals will be closed Wednesday and Thursday “due to the weather,” while the nearby Port of Beaumont will be closed Wednesday through Saturday — while a vast network of supply chains could be choked off for weeks.

Not only is Port Houston one of the largest container ports in the U.S., but it’s also a key link in the supply chain for numerous distributors, especially those serving oil & gas and industrial markets, not to mention many more suppliers for companies across the country. Based on past hurricanes, the impact of Laura could resonate well beyond the coast’s distribution and manufacturing hotbeds like Houston.

With the prospect of a double whammy — a global pandemic and a natural disaster — distributors in the hurricane impact zone and beyond are likely thinking about ways to further mitigate unpredictable disruptions to their operations. So, if you haven’t already, it’s time to add another item to your growing “to-do” list that already includes pivoting to PPE sales, remodeling your outside sales team and developing virtual training tools.

Make a Disaster Mitigation Plan

The focus at MDM for the last six months has been to help distributors cope with the coronavirus crisis. But companies should also remember that something like a hurricane — or a warehouse fire, or a port strike, or data breach, a major Chinese holiday, a global pandemic or any number of complications — can render a distributor unable to sell or ship product to customers.

During my prior stint here, I wrote extensively about what distributors can do to prepare for such threats, including a series of articles: Preparing for the Worst, Preventing Predictable Disruptions and Case Study: The Disruptive Holiday. The big supply chain disruption issues at the time included a major West Coast port shutdown that resulted in delayed cargo deliveries along with the usual array of hurricanes and other natural disasters.

For those articles, I spoke with Paul Dittmann of the Global Supply Chain Institute at the University of Tennessee-Knoxville. He outlined a few easy-to-follow tips for any company that wants to ensure its operations continue amid catastrophe.

These are ideas that have been top of mind for distributors since February and March, but they are good reminders as the U.S. gets ready for another gut punch:

  • Any disaster plan should start with procedures for safeguarding your team members first.
  • Identify possible risks that could affect your supply chain.
  • Rank the risks by how much they would impact your company and the likelihood of them happening.
  • Create a contingency plan that would keep your supply chain moving – or at least return it to operation quickly should one of these risks occur.
  • These include everything from finding alternate suppliers to securing multiple transportation networks to establishing emergency communication channels. Do the same for your customer support, as well.

As I wrote in 2017 when the Gulf Coast was bracing for Harvey, “disaster mitigation and emergency planning processes take time, planning and resources. Having a plan in place and never using it will always beat not having one and needing it when another disaster … strikes.”

Distributors bracing for Hurricane Laura, whether that’s a direct or indirect hit, are either sure of their readiness or worried that their operations could be shut down indefinitely. Which are you?

We hope all companies in the path of Laura remain safe over the coming days. Please drop me a line at eric@mdm.com with the latest updates to your business, and we’d also like to hear how distributors are helping the surrounding communities cope with or recover from this latest hurricane.

Related Posts

About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

0

articles left

This is your last free article

Subscribe to MDM Premium today and get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.