Supply chain execs share disaster-planning techniques

Network World - Without warning, a supply chain executive from Wal-Mart Stores Inc. told his operations and administrative staff to pretend that a particular distribution facility had burned to the ground. They had until the end of the day to figure out how to service Wal-Mart's stores without depending on the impaired facility or its displaced staff.

Such training exercises help Wal-Mart make sure its supply chain operations stay flexible, said Gary Maxwell, a senior vice president in the Bentonville, Ark., company's replenishment division. Maxwell took part in a panel of supply chain experts at the Retail Systems show held in Chicago last month.

Coping with supply chain disruptions is a challenge for many companies, said Andrew White, a research director at Gartner Inc. and moderator of the panel. As retailers and manufacturers continue to trim the fat from supply operations and more closely tie investments to demand, it becomes harder to maintain a resilient supply chain. "When you become so lean, the supply chain is very fragile," White said.

IT systems can help. For example, RFID technology can make staff more aware of events and conditions in the supply chain, White said. The ability to collaborate with trading partners also is a key discipline.

Learning from Katrina

For Procter & Gamble, a well-tuned business continuity plan was critical to recovering after Hurricane Katrina swept through the Gulf Coast region last August and left the company's Folgers coffee-making facilities submerged. "It took our entire production facility off-line," said Jake Barr, an associate director of supply network operations at P&G.

The company's first priority was its workers. Locating staff was a huge job, Barr said. To help its displaced workers, P&G set up Gentilly Village, a temporary housing facility on the Folgers plant site that accommodates 500 families and is still in use today.

Meanwhile, available P&G employees and contractors took steps to repair and restart the Folgers plant and manage retailers' coffee supply -- when Katrina hit, it affected 40% of coffee consumption in North America, Barr said.

Despite all the hurdles, P&G managed to reopen its Folgers plant on Sept. 19, just three weeks after Hurricane Katrina hit. By Sept. 23, P&G had resumed more than 85% of its coffee production using third-party sources and alternate P&G sites. By November the company had its coffee production and roasting facilities running at full capacity.

Having detailed, up-to-date contingency plans allowed P&G to bring its plant back online quickly, Barr said. There was no time to make plans with the hurricane swirling offshore, they had to already be in place, he said.

P&G's plans included a freshwater source and secondary suppliers for items such as packing materials. The company also had design images and digital photos of every part of its operations. In the weeks leading up to Hurricane Katrina, P&G had refreshed its disaster recovery plans, which it does on a regular basis so the data stays current, Barr said.