Making It Through the Storm

Making it through the storm

This article explores the concept of business disaster-readiness after the most recent hurricane to strike the east coast. It highlights one Westchester County business that was not adequately prepared, ConEdison, New York City’s biggest electric utility company. The storm left 960,000 customers without power due to ConEdison’s lack of preparation for disaster. Its facilities were designed to withstand a tidal surge of 3.8 meters, but Hurricane Sandy caused a surge of 4.3 meters; this left the company’s underground facilities flooded. On the other hand, Goldman Sachs was one of the few New York City buildings to remain dry and illuminated during the storm. This can be attributed to its disaster prevention techniques: investments in sandbags and electricity generators.

This isn’t the only way weather can create problems for a business. For instance, last year’s tsunami in Japan reminded companies that moving to “just in time” manufacturing techniques can bring new risks. American carmakers had outsourced essential parts to Japan, and were unable to get them on time after the storm hit. An emergency inventory supply might have prevented a stock out. Additionally, floods in Thailand showed why all important parts should not be stored at one single location, as a large proportion of the global supply of hard-disk drives were coming from one source. Lastly, weather isn’t the only disaster that can affect a business; the Y2K scare and the tragedies of September 11th shed light on the risks of an IT scare.

These types of events have great implications for logistics systems. In order to be successful, disaster risk-management needs to include suppliers farther down the chain, in addition to your own system. According to a survey published last week by DHL, a logistics firm, “23% of big companies did not include their entire supply chain in their business-continuity plan.” This is an absolute necessity to avoid unnecessary stock outs or...