Preparedness and Supply Chain Management, by J.C.R.

When we think about preparing ourselves, families, communities, businesses, and country we are really at the core of the issue preparing for any disruptions to our supply chain.

When we hear the phrase supply chain management, most of us are thinking about raw goods and materials as they relate to the manufacturing process and how/when those goods are delivered.  But not just delivered from the supplier, but how they make it into the production process and as a result are turned into a usable finished product to be consumed.  On occasion, we’ll relate the supply chain phrase to the grocery stores as we have the preparedness mindset and we’ll talk about the fact that most stores only carry three days worth of goods.  But I’d like to broaden the scope of supply chain management a little.

While it is true with the computer age came the age of Just-In-Time inventory and this allowed companies to reduce the amount of cash that in times past was tied up in inventory that often turned obsolete, it also created tension all along the supply route.  Since everything seems to be geared to arrive for sale at about the exact time you walk in the door to purchase it, the slack in the rope has been removed.  This can be seen pretty quickly during weather related storms and the grocery stores.  Let a storm hit two days after the last shipment and the shelves are bare.  Let the weatherman call for a huge storm and all of a sudden the distribution centers are racing around the clock trying to get goods delivered to the outlets.  They would be working around the clock, not to reduce the impact of the disaster, but instead, simply because those in charge know without a doubt, the product will get sold…and rather quickly too.

As you begin to think about emergency planning and disaster preparedness, things will almost always get back to providing those things in our lives we consider basic necessities.  Let’s again think outside of the box and not get caught up in the grocery store example.  Let’s take it a step farther.  Let’s think hard about the supply chains in our own lives, those things that at this particular moment in time we feel like we could do without but wouldn’t want to.

As you woke up this morning and made your way to the bathroom, you probably hit the light switch and when finished, flushed the toilet.  Then maybe you padded over to the sink to brush your teeth and then off to the coffee pot.  Somewhere along the way you turned on the television or fired up the computer to get the latest in news and weather.  Your routine is off to its normal start and continues with you getting dressed, breakfast, and maybe heading out the door.  Maybe you threw a load of clothes in the washing machine or dryer; maybe you set the security alarm, closed the garage door, or took the trash down to the end of the drive, etc. before jumping in the car and heading off to earn that days wages.

You make your way through several intersections and stop lights all the while never really being aware of what is going on around you.  You assume that the car coming towards you will stay on his or her side of the yellow line and since it is that way 99.99% of the time, no need to worry.  You show up for work to a job that is largely provided and created by lots of additional people.  You may be the cashier at that grocery store, but you depend on thousands of people to make things possible for you to earn your wages.  Maybe you are in Sales; you depend on product development, marketing, manufacturing, etc. to create something you can sell.  In each and every one of these steps and processes, there lies a “supply chain” that is created or supported by someone other than you.

Back to the house.  When you headed to the bathroom, the electricity came from somewhere.  When you flushed the toilet it was made possible by others, more than likely, with the waste disappearing somewhere.  The first point I am trying to make although it seems like a feeble effort on my part is to get you to think about the things we do and how it is made possible.  If you can wrap your mind around that as you go through several days, you’d get the picture.  I understand that one of the first steps in financial counseling is to have the client list every penny they spend in a thirty day period.  This isn’t to inform or educate the counselor, but is there to bring to light where the potential problems might be. 

Let’s take the most simple of disasters, the winter storm.  It often comes with several days of advance warning and plenty of media coverage.  You can track it as it moves across the country and into your immediate area.  Most have plenty of time to prepare if they wanted to.  So in our supply chain model, things that are likely to become an issue if provisions are not provided for are heat, electricity, water, entertainment, medical supplies or assistance, travel, etc.  To what degree one is prepared is a simple function of how many of these “supply chains” that have substitute systems in place.  For heat, maybe it is a kerosene heater, for electricity it could be a generator, entertainment is now board games and books.  Water could have been stored, travel suspended, and medial issues addressed before the storm every showed its ugly face.  I was recently at a medical supply business and we were talking about oxygen tanks.  I asked them if there was any type of seasonal “thing” with demand and they said only when they are calling for very bad weather…then they can’t keep enough tanks on hand.

Most winter storms give enough advance notice that the family can prudentially put into place a secondary set of supply chains to take the place of what seems normal.  One those things are in place, they will still watch the news but the stress level is not there and if your house is like mine, there is a certain air of excitement.  No school, sit around all day and eat and play.  You get the picture.  It is much more relaxed because alternative supply chains were put in place.  We probably would have never called it as such, but that is what we have done.

If you were to make a list of events that are more likely to happen than others, the winter storm might make the list.  Earthquakes, floods, forest fires, and hurricanes might make the list.  All of these could be grouped together and an action item list developed to provide for your second supply chain as they are similar in the types of services you might lose.
But to your list of disasters that you might face could (and should) include the lose of your current income.  You could add house fire, economic collapse, identity theft and other such events.  Why worry about an asteroid impact when you have made no provisions for being laid off.

Imagine what someone’s “supply chain” might look like if they lost their current job.  The secondary supply chain might include things like a working spouse with skills or a second set of skill sets that are outside of your current one.  Being networked within your field with others that might help you locate that next job.  It could and should include an emergency reserve of cash to pay the bills.  If you are in high-tech and technology goes away, you’ll need to replace those skills with something more manual, don’t get forget to think about the tools that might be required to do that job.  The time to think about what other areas of interest you’d have in earning a living is not in the midst of the disaster but before it happens.  This again reduces stress as you will have the chance to put things in place beforehand.  As part of my automobile insurance policy I carry the uninsured motorist policy.  I don’t fret not one single car I pass wondering if they are driving without insurance, because I have taken that risk out of the equation by buying my own.  Why trust everyone to carry insurance when I can pay a little extra and know without a doubt, I have it covered.

These are just a couple of examples that we can all relate to and in most cases lived them in real time.  I’d like to encourage you to expand this “secondary supply chain” principle to as many aspects of your life as you can think of.  I have a friend that day trades stocks.  One of the biggest things he has done to insure the supply chain of information and his ability to trade stocks is that he has three different ways to access the internet.  He has his standard high speed DSL from his local service provider but also has a secondary, although slower, connection from another provider that’s infrastructure is not in the area.  When I asked him about the slower connection, he explained why pay for fast access when probably all he’d be doing is cashing out.  Stable was what he was after not fast.  And if that wasn’t enough redundancy in his supply chain of access and information, he had a laptop with a wireless modem tied into yet another service provider even farther away.  This is so that if he ever has to scramble out of the office, he can still take care of his livelihood.

As we think about all of the simple “supply chains” in our individual lives, your list might look something like this…food, water, electricity, waste disposal, communication/information, medical assistance, security and safety, shelter, travel, entertainment, income, heat/cooling, and cooking.  I might have left something off, but if there is a way to insure that I can partake out of convenience all of these goods and services from the “principal supply chain” but also have at least a start on the substitutes that make up the “secondary supply chain”, the stress of anything pending would be less.  And if you could get solidly through the substitutes and then create a third set of options, you’d be light years ahead of almost all of the general public.

We have all heard and used the saying “two is one and one is none”, but have we given much time and thought about how to replace those things.  You might have a barbeque grill with a spare propane tank and be thinking “two is one”.  But what happens when the grill gets stolen, the burners crap out on you, or the second tank now runs empty.  You look to Dutch ovens, cooking over the grate you’ve taken out of the grill (if it wasn’t stolen), cook with a solar cooker that doesn’t require you to stand there and feed it wood, or you eat the meals you have on hand that doesn’t require cooking.

Your supply chain for water might look something like this.  The primary supply chain might look like the tap either from city water or your well.  The secondary supply chain might be stored water; your third supply chain might be a rain barrel catchment system with a supplemented water filter.  Your forth supply chain system might be five-gallon buckets to haul water from the nearest pond or river with a large pot to boil the water to purify.

By now I hope you are getting picture.  The Supply Chain model that is used in essentially every single business I can think of applies to those preparing for the uncertainties of life.  In fact, I think that they have a much more meaningful impact on us as the health and well being of our families, friends, and communities depend on us being able to replace as quickly as possible that very first or primary supply chain.