Skip to comments.Supply Chain: How Wal-Mart Beat Feds to New Orleans
Posted on 11/13/2005 8:05:37 AM PST by John Jorsett
The hurricanes that flattened the Gulf Coast in August and September tested corporate logistics and supply chain operations, as companies struggled to move relief supplies and inventory to and from the region before and after each storm. One lesson from these storms is that having procedures for communicating quickly about what needs to be done is as essential for companies as having integrated inventory and logistics systems.
"Resilient companies communicate obsessively," says Yossi Sheffi, director of the MIT Center for Transportation and Logistics.
Wal-Mart, for example, was able to move food, water, generators and other goods to areas hit by hurricanes Katrina and Rita following each storm because it has an emergency operations center that is staffed every day around the clock by decision-makers who have access to all of the company's systems.
Under normal circumstances, a six- to 10-person staff at the center responds to everyday emergencies, such as a fire in a store or a shooting outside one. When disasters such as hurricanes threaten, the staff is joined by senior representatives from each of the company's functional areas, says Jason Jackson, Wal-Mart's director of business continuity. The center is equipped with hurricane-tracking software, and on Aug. 24, days before Katrina made landfall, company managers were already planning their response.
The emergency response team works in a large, open room that is designed with efficient communication in mind. When a district manager calls from the field to tell the operations manager in the center that he needs 10 trucks of water, the operations manager can turn to the person manning the replenishment systems.
The replenishment manager then checks his supplies. "He says, 'I can get you eight [trucks] today and two tomorrow,'" says Jackson. "He then tells the logistics guy. This all takes place in a matter of seconds."
As a result, Wal-Mart trucks were distributing aid to Katrina's victims days before federal relief arrived. During a less destructive hurricane, Wal-Mart ships between 200 and 400 containers of goods for sale or relief. In the first two and a half weeks following Katrina, Wal-Mart shipped 2,500 containers to the region and delivered another 517 containers post-Rita. Wal-Mart also set up satellite links for its stores that lost phone or Internet service so that they could stay connected to headquarters; Wal-Mart stores in areas that were without power for weeks were able to keep generators in stock.
Starbucks was also able to get aid to hurricane-ravaged areas quickly. When the company got a request from the American Red Cross to donate coffee, managers at headquarters contacted the company's distributors to discuss how they could help. Starbucks determined that it could donate 30,000 pounds of coffee, 235,000 bottles of water and 44,000 pastries without affecting supplies to its retail stores. Efficient communication also helped many companies avoid losing goods in the storm. MIT's Sheffi notes that GM was able to contact its dealers in New Orleans about moving their inventory out of the city and then sent car carriers to pick up the vehicles.
Sheffi says the long-term implications of this year's hurricanes will be that companies will now pay more attention to building redundancy and flexibility into their logistics operations. Companies that can communicate quickly are well positioned to weather any storm.
Showing once again that government is the problem, not the answer.
Thanks for posting this.
This shouldn't surprise anyone.
FEMA should hire Walmart, Home Depot and Lowes to handle the acquistion of emergency food/water/materials and the transportation of these needed items to disaster areas.
Then, FEMA can hire the Salvation Army to distribute what is needed to the needy. Keep the Red Cross out of this. We saw their greed post 9/11.
Then, we can donate to the providers or the Salvation Army and eliminate all of the greedy paws that show up after any disaster like Jihad Cindy's group of pseudo vets.
Last but not least to really frost the left wing, Haliburton should be hired as the overall Project Manager in damage control, clearing and rebuilding.
Case in point: I recently cleaned out the Wal-Marts in my local area of Duck brand mounting tape (the removable kind).
I bought the entire inventory of this tape in the stores in Hudson NH, Chelmsford MA, Tewksbury MA, Hudson MA, and Salem, NH.
This represents about $150 worth of tape. A tiny drop in the bucket with Wal-Mart.
Nevertheless, within a few days, the stores completely replenished their stocks of this tape.
Not really much *news* that succesful chain store operations have established, efficient transportation/ communication/ supply infrastructure that exceeds the capability of gov't organizations. Just a plain old fact.
Given GM's current financial woes and slow sales, I'm sure that they now wish they had moved inventory into New Orleans prior to the hurricane!
Great piece; thanks for posting it. One of the things that jumps out at me is that WalMart has decision makers in place to, well, make decisions. Compare/contrast with how the gubmint typically reacts: press conferences, blame shifting, finger pointing, demagogery. None of this is really all that difficult: identify the problem; decide how to react to it; execute.
I was shocked at the positive press that a PBS show allowed for WalMart
on the "NOW" show (that Bill Moyers used to host).
The show had a townhall of hurrican evacuees and city, state and fed
officials at the PBS station in Baton Rouge.
The host (David Broncoccio?) allowed the mayor of one of the New Orleans
suburbs to loudly declare about how WalMart trucks were the first on the
scene in his city (Slidell?).
I was suprised that the host (and editors) allowed the mayor to give
such praise to the Evil Satan WalMart.
So, you are trying to corner the market on duct(duck) tape, eh? I will keep a close watch on duct tape futures to see how successful THIS venture will be.
Yeah, I wonder if it took a 18 month $1 billion research and planning commitee for these companies to deduce the most effective method for dealing with the logistical problems of dealing with disasters that effect their business?
Grampa dave - you have some really great ideas.........too bad no one who should be thinking along those lines will.
Another key point not said is that WalMart is a business, in business to make money. The US government is in business to spend taxpayers money, nothing else.
**FEMA should hire Walmart, Home Depot and Lowes to handle the acquistion of emergency food/water/materials and the transportation of these needed items to disaster areas.
Then, FEMA can hire the Salvation Army to distribute what is needed to the needy**
Excellent suggestions! I would add 'and Catholic Charities' to the Salvation Army, however.
It's not like that at all. I use this particular tape to decorate my house at Christmastime. I hang a large amount of lights throughout my house (floor to ceiling) this time of year. It's the only tape out there that doesn't peel paint and wallpaper when you remove it. And my kids and I hang over 150 strings of lights (no kidding).
Why should FEMA "hire" organizations that are already doing this work anyway?
Federal funding always has strings attached...
Seems to me we'd be better off if FEMA DOESN'T "hire" them.
Thanks for that tip!!!!
Slidell is NOT a suburb of New Orleans. We are 35 miles away in a different parish.
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