There are many risks and threats to the supply chain. One of those risks are natural disasters such as earthquakes, tsunami’s, floods, fires, and tornadoes. Because natural disasters are so hard to predict they can be extremely difficult for supply managers and firms to prepare for. Years of hard work, millions of dollars earned and spent on facilities, procedures, and infrastructure can all be destroyed in a matter of minutes at the hands of a natural disaster or catastrophic event. Although some areas are more prone to being hit with natural disasters, no part of the world is immune to these unfortunate events. Instability with the supply and demand of the supply chain can cause crippling effects and bring all operations to a screeching halt. All parties are affected by this instability. The shipper, the purchaser, the local economies, and the customer. This instability can affect employment skills and damage management relations (Sterman, 2000). This instability creates what is known as the bullwhip effect. The Bullwhip effect is when supply inventories go through phases of peaks and valleys as they move along the lines of the supply chain (Stanton, 2019). Though the Bullwhip Effect can be problematic, it is not a rare event along the supply chain. Despite its occurrence, firms must find ways to fix this problem.
They must have qualified and diligent personnel that are willing to follow the links of the supply chain to root out the problem. Another risk to the supply chains are natural disasters. Natural disasters can bring as supply chain to a complete halt quicker than anything. They can affect all modes of transportation and devastate all phases of the supply chain. They can wreak havoc on local businesses that generate the supplies needed to top off the supply chain. The recovery periods that firms may have to deal with after natural disasters can be long and strenuous (Carey, 2018). In 2011 the Tohoku earthquake and tsunami affected supply chains across the globe (Carey, 2018). The natural disasters caused the country of Japan $210 Billion alone. Auto giants Toyota, Nissan, and G.M. had to completely shut down operations both in Japan as well as the U.S. The U.S. plants were dependent on those Japanese plants because many of them were the starting points of the auto supply chain. Just in time deliveries were left in disarray (Carey, 2018).
Another example of a natural disasters impact is Hurricane Maria and the devastation it placed upon the island nation Managing risks to the supply chain 4 of Puerto Rico. Puerto Rico’s largest industries are pharmaceuticals and medical devices. In September of 2017, both were destroyed by Hurricane Maria (Carey, 2018). The effects of the hurricane reached back to the U.S. and forced companies to ration saline (Carey, 2018). Hurricane Florence also dealt a major blow to supply chain operations in the state of North Carolina specifically. Warehouse, storage facilities, and container yards suffered tremendous Damages (Carey, 2018). Rail and ground transportation supply chain operations were disrupted along Interstate 95 due to severe flooding (Carey, 2018). The automotive, agriculture, textiles, and manufacturing industries were disrupted as well (Carey, 2018).
