Economic uncertainties and the threat of natural disasters have caused many manufacturers to look at their risk assessment procedures. Manufacturing firms that rely on foreign suppliers may be at a heightened risk of production disruptions, so companies are focusing on improving enterprise agility, according to Supply House Times. Increasing agility can mitigate the risk of disruptions.
Manufacturers can prepare for natural disasters by increasing employee awareness of risks. Business continuity planning can help companies respond to unexpected production delays and disruptions. The risk management process is something that workers need to perform regularly so disruptions can be effectively handled, the source noted.
Companies often forget to consider the implications of damaged equipment after a natural disaster, EBN stated. For manufacturers, if production equipment is damaged in a storm, it can lead to serious disruptions and economic losses. After the severe floods in Thailand, the country suffered a 2.5 percent loss of gross domestic product, which amounted to approximately $9 billion. This figure did not account for lost and damaged equipment. Reverse logistics and repairs are important components of natural disaster recovery.
After a major storm, manufacturers may need to temporarily redraw supplier networks to prevent product delays. When it comes to damaged facilities, companies often assess the impact of damages after the fact, EBN said. Firms need to establish a protocol for when parts and equipment should be scrapped after experiencing damage and when a device is considered unusable. Production companies may need to plan in advance to utilize alternative logistics methods if a severe storm or earthquake wipes out infrastructure. Firms also need to prepare an emergency inventory in case suppliers and vendors experienced a disruption. Companies of all sizes need to have strategies in place for natural disaster management.