Guest Column
Hurricane Ian taught us some lessons for 2023 | Column
Effective hurricane response starts now, long before disaster strikes.
A damaged home caused by Hurricane Ian was seen along Fort Myers Beach last month.
A damaged home caused by Hurricane Ian was seen along Fort Myers Beach last month. [ AL DIAZ | Miami Herald ]
Published Nov. 28, 2022|Updated Nov. 28, 2022

Imagine it’s September 2023 and another Category 4 hurricane is gathering steam off the Gulf Coast. We don’t know where landfall will happen, so we can’t gauge the impact the storm will have on states, cities, communities and ultimately the supply chain that will be critical to any recovery effort.

Larry Snyder
Larry Snyder [ Provided ]

If that’s when these questions start to be addressed it’s already too late. The time to think this through is not September, or the summer or the spring. The time to start planning to avoid major disruptions caused by the storm, and the respond to its impact is now.

And a focal point of those planning efforts is the supply chain itself. The supply chain will be required to sustain a population that stayed behind. It will be required to meet the needs of a transplanted and perhaps transient population in the wake of landfall. And it will be critical to emergency response and recovery operations.

In 2022, the ripple effects of Hurricane Ian were felt across Florida and the Carolinas. The death toll surpassed 100, and many areas were compared to war zones. Homes were leveled, debris everywhere, power lines scattered across towns and neighborhoods. Flooding posed serious and a more long-term threat to homes and neighborhoods. Electrical grids were tested as hundreds of thousands of people were without power.

Supply chain disruptions made it difficult for homeowners and businesses to start rebuilding. Lumber, already in short supply due to disruptions and transportation shortages, faced elevated demand, leading to more shortages.

And all of this had a further cascading effect. Florida is home to thousands of manufacturing and distribution facilities. These facilities supply the healthcare industry, automotive industry, and others. Right now, these supply chains are at a standstill as businesses work to get back on track.

Victims of their own success

Supply chains have become the victims of their own success. For decades, experts promoted “lean” supply chains for their low costs and high speeds. “Just-in-time” systems, as the name implies, made it possible for businesses and manufacturers to have what they needed when they needed it without having to incur the logistics challenges of buying and storing supplies that they don’t immediately need, or may never need. In this way, companies squeezed as much slack as possible out of inventories, capacities and workforces.

But lean supply chains are also very fragile. When things don’t go according to plan, the system can quickly grind to a halt.

Adding back slack

Supply chain optimization researchers have been arguing for years that we need to add slack back into the system.

That doesn’t mean we need to double inventories or have multiple redundancies. A small amount of slack can go a long way. The question is where, when, what type, and how much slack to add.

Should we have extra warehouse capacity? Extra inventory? Should we add extra workforce? Where in the supply chain will adding slack make the most difference? At the manufacturer? In the distribution system? At the retail level? Should we have a single buffer, or should it be spread throughout many locations?

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Imagine solving a network design problem to choose locations for warehouses. Some solutions perform better than others in the day-to-day (they are efficient), while some perform better when disruptions happen (they are resilient). A planner might be reluctant to choose a resilient solution, thinking it will cost too much in the day-to-day.

Adding resilience

But evidence from the research literature suggests that, often, resilience can be added with only small sacrifices in efficiency. In other words, it’s often possible to add a lot of resilience into the system with a relatively little extra slack.

It’s a lot like insurance: We pay a little extra each month so that, if things go wrong later, we’re covered. We’re willing to sacrifice a bit of monthly efficiency for the sake of long-term resilience. Why not take this philosophy with supply chains?

Most businesses are now acutely aware their supply chains are at risk. Fortunately, some are starting to take steps to strengthen supply chains and protect against disruption risks. But many are not.

After each major disruption — from Hurricane Katrina in 2005 to Superstorm Sandy in 2012 to COVID-19 in 2020 — experts have urged companies to shore up their supply chains, and companies vow to do so. It now appears, policymakers, government leaders and companies are listening.

As we head into 2023, the smartest thing decision-makers can do is start to lay the groundwork for that major storm that could come later in the year. It may seem to some that they have better things to do at the time, but once that storm begins to tear apart ocean-front property, the decision to start planning in January is one no one regrets.

Larry Snyder is a professor of Industrial and Systems Engineering and director of the Institute for Data, Intelligent Systems, and Computation (I-DISC) at Lehigh University. He received his doctorate in industrial Engineering and Management Sciences from Northwestern University. He is an active member of INFORMS, the largest association for the decision and data sciences.