How long does it take for SC managers to really care about Katrinas?

Filed in archive Point of view on June 12, 2007

So far I have written a number of posts on resilient supply chains and the importance of developing risk management plans in order to avoid great losses in the case of disaster. Specifically I wrote a post with the title "There are always Katrinas to corrupt your supply chain" on September 2005 on Katrina, at the time when not many companies were using supply chain risk planning modules.

From that time, almost two years has passed. What is the current stage of usage in risk planning modules? Has it increased? Not really and that's quite interesting!

Recently I was talking to one of the supply chain managers in a manufacturing company and asked him about this issue; the response was: "We have to take care of the basics first!".

On the other hand the National Oceanic and Atmospheric Administration (NOAA) announced recently that this year's hurricane season, which runs from June 1 to November 30, is forecast to be above average with as many as 17 named storms compared with an average number of about 11 per season.

According to a recent study by McKinsey on supply chain risks, only few companies are really taking into account the consequences of such events in their planning system. Honestly I don't how long should it take for companies to take risk management seriously but it seems a necessity for senior managers to change their minds and come to an understanding that Hurricanes always say hello to us so we have to make our supply chain resilient.