Since the inception of Supply Chain Matters, we have amplified numerous occurrences of significant industry supply chain disruption brought on by natural disasters. The obvious pattern is that the frequency, scope, and impacts have been increasing with every passing year.

As we pen this commentary on Friday, August 25, 2017, two significant storms have the potential to add to industry supply chain concerns.

Typhoon Hato, being described as the strongest storm to hit parts of southern China in half a century continued to wreak havoc on the country, leaving 16 people dead, dozens injured and forcing tens of thousands to be evacuated from their homes as of Thursday. Upwards of 30cm (nearly 12 inches) of rain was expected in some parts of Guangdong and the neighboring Guangxi province as the storm passed through.

The immediate impact area included the island of Macau, Hong Kong, and parts of southern Guangdong province. The Hong Kong area is a major center for global transportation both ocean and air, with the all-important Port of Shenzhen in close proximity. As many of our high-tech, consumer electronics, smartphone and other industry supply chain focused readers are acutely aware, Guangdong serves as critical manufacturing and supply chain production sourcing center. August is further a critical period since many manufacturers are in high-volume production ramp-up for the upcoming holiday fulfillment period in Q4. The Typhoon comes just after a major power blackout struck the island of Taiwan, leaving the island’s power grid susceptible to added brownouts.

Also, as we pen this blog posting, Hurricane Harvey has been churning up the United States Gulf Coast and is forecasted to strike the Texas coastline somewhere between Corpus Christi and Houston as a Category 3 hurricane. Reports note that Harvey may be the strongest and likely most devastating storm to impact the Texas coastline in nearly 30 years. What makes the hurricane far more concerning are forecasts that the storm will linger after initial land impact, perhaps looping back out to sea, and striking again. Harvey is expected to drop over 30 inches of rain in some areas, and the duration could be as much as 5-7 days. 

We all know that the forecasted geographic area of impact is the epicenter of energy and petrochemical production in the United States and other nations, thus the disruption impact to multiple industry supply chains as well as to all forms of transportation and logistics service providers is concerning to state the least. Previous storms of this same magnitude and threat, such as Hurricane Ike that struck this region in 2008, and Hurricane Katrina that struck the Louisiana coast three years earlier, brought wide-scale damage, disruption, and after-effects.

As always, we share our concerns for the health and safety of all of those in the path of these two significant storms. Hopefully, prior government and private industry efforts to mitigate storm damage and reduce the threat of human casualties may help to mitigate impacts.

Needless to state, many industry supply chain, procurement, and product management teams will have been having frequent communications with suppliers, contract manufacturers and services providers within these impacted regions.

Let us all hope for the best outcomes.

 

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.