The very essence of our role in supply chain is to plan for the worst-case scenario and ensure we can meet the needs of our customers. In our new reality of extreme hurricanes, tornados, floods and snowstorms, just how good is our plan? In the first 6 months of 2017, the United States alone has endured 49 separate climate and flood disasters, according to data from Munich Re, a global reinsurance firm. Munich Re estimates the costs of these events at $21 billion. You may have a back up plan for one line. What if the entire plant goes dark for six months? Just how much can your supply chain withstand?\
Take, for example, the horrific destruction of Hurricane Maria on Puerto Rico in September 2017. The loss of life and the devastating stories coming out of the aftermath of the storm were shocking to all who were watching the coverage. Just as shocking to the healthcare supply chain community was the realization of just how big the medical device and pharmaceutical manufacturing capacity had grown on the island. As the list of drugs and devices impacted kept growing, the panic in hospital supply chains all over the country began to set in.
Turns out, at the time of the hit, nearly 40% of US IV fluids were manufactured in Puerto Rico. IV solutions have been in short supply and on allocation in the US since around 2014 due to manufacturing challenges. Chief Resource Officers like myself had grown used to micromanaging supply to ensure patient care wasn’t impacted and we lived with that new normal. Overnight the already inadequate manufacturing capacity was cut in half and the lives of every patient in every US hospital were put at risk. Maria hit in September and many plants couldn’t return to full manufacturing capacity until January thanks to power shortages, labor shortages, supply interruptions, etc. As these weather patterns continue, many more areas are put at risk. So what can you do to ensure your supply chain is prepared for when Mother Nature sends us her worst?
Time to stress test. How do you thoroughly analyze and quantify scenarios for the loss of entire plants or geographies for weeks or months at a time? SAP IBP’s robust “What -If?” analytics allow you to seamlessly and efficiently model the worst-case scenarios Mother Nature could impart upon your business. What if the back up generators are only enough power to support one line? What if an entire plant goes down for 6 months? What if an entire geography is devastated and unreachable for weeks?
IBP gives you end to end visibility and analytics capability to model your supply, demand, inventory and optimize your potential solutions. IBP provides you answers to the most important questions in how your business will react to a natural disaster strike to your supply chain.
- What if a distribution center is temporarily shut down due to snow, rain, sleet or hail? IBP allows you to run scenarios for alternate sources of supply in seconds to ensure you can meet your customer demand.
- What if an entire plant is shut down due to power failure, flooding, strikes, etc. IBP allows you to run scenarios to determine the least expensive and most efficient use of existing stocks and alternative supply scenarios.
- When inventory is constrained, how do you protect your biggest and most important customers? IBP allows you to model penalty costs that will direct product flow to your highest valued markets and customers.
- What if you could model these events and more? Be prepared, be confident, be smarter!
Join SCM Connections on August 29th at 3pm EST/12pm PST for a discussion on how to stress test your supply chain to ensure you are prepared for anything mother nature throws at you. We’ll talk through best practices and run a live IBP Demo highlighting the power of IBP as your #1 supply chain disaster preparedness tool.