I hate to add yet another risk to the long list you are already monitoring, but as Hurricane Andres reminded us this week (albeit quietly in the Pacific rather than in the Atlantic), hurricane season is upon us. The good news is, the ‘09 hurricane season is expected to be at or below average. But even with a relatively low 48% chance of a major storm making landfall on the US coastline, there’s still a considerable risk of transportation and/or supply chain disruptions for many companies. And of course, a storm impacting oil rigs or refineries in the Gulf impacts every business from a fuel perspective.

Last fall my colleague, transportation category manager Rachel Rutkoski, provided some excellent advice for companies looking to reduce the risks brought on by these powerful seasonal storms (or any natural disaster disruption). Her advice is worth revisiting today if your supply chain, transportation nodes, or markets reside in or pass through the Gulf states, southeast, mid-atlantic or northeast (which includes just about everyone right?).

What steps did Rachel recommend?

• Get proactive, rather than reactive - If you’re creating a contingency plan when a storm or longshoremen strike is imminent, it’s too late. Few options will be on the table as the procrastinators all scramble. Since you can always be certain there will be events beyond your control in the next few months, it’s certainly worth preparing for them ahead of time.
• Do the math - Floods in the Midwest forced shippers to use more expensive modes of transportation. Modeling costs to determine when it’s wise to pay the premium or wait it out will help you make critical decisions quickly. There are almost always options - the question is whether or not they are worth the added cost.
• Beware the Bullwhip Effect - As we all know, one thing now can have huge impacts down the road. So understanding the inherent inputs, cost drivers, and risks to your supply chain will help you cope with disruptions so they don’t reverberate across your materials, production, distribution, and customers.
• Have a game plan for natural disasters - Obviously, each and every event will be different. But having a plan and an established decision making chain of command will go a long way. The last thing you want is a “Heck of a job, Brownie” situation where everyone is hoping someone else will step in and sort things out.

Even if forecasters are correct and it’s a relatively mild hurricane season, it only takes one storm to wreak havoc on your business. Be prepared.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.