This article is part of a series on natural disaster preparation and response. View all the articles here.
In 2012, Hurricane Sandy took down Procter & Gamble’s Avenel, New Jersey, plant.
At the time, the facility made 91% of P&G’s perfumes. The other 9% were made by five manufacturers in that same area who are also essential suppliers of raw materials for the fragranced products P&G makes.
It came back online with a generator and a skeleton crew after two and a half days — a seemingly small interruption in the grand scheme (the CPG giant has since sold the plant). At the time it was deemed a relative success.
A few years before Hurricane Sandy rocked the New York area, P&G reorganized its disaster response structure. It brought disaster decision-making into a control tower model — also called a "decision-making clearinghouse."
Previously, each of P&G’s 300 facilities around the world made its own planning decisions. If a disaster struck, there was no central authority handing out orders or prioritizing with the entire business in mind. It was every warehouse, business line and product for herself. After the shift, disasters triggered a streamlined process, and P&G’s "planning service center" was born.
"We recognized that it was very reactive and … we needed to go from being reactive to proactive."
Associate Director of Planning, P&G
Bob Herzog, associate director of planning at P&G, said the centralization helped and the relatively quick recovery from Sandy’s chaos was proof. The planners expedited deliveries. They sourced from abroad when domestic suppliers were down. They even worked with R&D to temporarily reduce the amount of fragrance in several household products until supply recovered.
According to Herzog, decisions in the moment were made quickly and decisively, but the control tower model wasn’t enough.
"Although this was a new capability for our company and new capability in the industry, we recognized that it was very reactive and … we needed to go from being reactive to proactive," he told sister publication Supply Chain Dive.
Getting ahead of the storm
Three years ago, P&G set out to augment that decision-making clearinghouse with technology that could help the team make decisions faster and sooner when supply chain disruptions were on the way — not after they arrived.
The answer came from Canadian tech provider Kinaxis, maker of a product called Rapid Response. The cloud-based software maintains a digital map of P&G’s supply chain, along with the bill of materials (recipe) for every product. Bringing in data from the company’s ERP system, Herzog’s team can run scenarios to find out the best possible adjustment when a link in the supply chain has to be changed for any reason.
“What if some of our materials are delayed or not available for a period of time? We can eliminate that and see what the impacts are,” said Herzog.
Kinaxis also incorporates external data like the National Weather Service forecasts to start planning for a storm the moment it is detected.
"We take what used to be days if not weeks' worth of effort and we can get that work done in hours and sometimes minutes."
Associate Director of Planning, P&G
Rapid Response alerts Herzog’s planners to all manner of anomaly whether it’s a weather forecast or a string of trucks behind schedule. P&G sets what Kinaxis calls "guard rails" for what constitutes an anomaly or "exception" in the normal course of business and then the software assigns a level of priority to those exceptions based on how important the supplier, route, facility or product in question is to the business.
Then the planners can run scenarios to try to avoid disruption in the most cost-effective manner.
"We take what used to be days if not weeks’ worth of effort and we can get that work done in hours and sometimes minutes," Herzog said.
Data disaster in, data disaster out
The Kinaxis system is "powered by a lot of data infrastructure that we had to put in place to get near real-time data from the supply chain so that we know when an area is potentially affected," Claudio Borger, program manager at P&G, told Supply Chain Dive.
The planning team needed to ensure a robust ERP was sending clean data to the Rapid Response system in order to glean value. Then it needed to import as much real-time data from elsewhere in the supply chain to know precisely when deliveries were being made and trucks were leaving facilities.
"We’re agnostic to any type of data sources," Tom Gregorchik, senior industry principal at Kinaxis, told Supply Chain Dive. "We can take in all that data and harmonize it to make sense of it."
Modeling out the future goes far beyond hurricanes. Small disruptions like road closures or missed or late shipments from suppliers can trigger alerts too.
P&G planners even modeled out scenarios for the Mexican border closure when President Trump began threatening that possibility — a much tougher scenario to run than small, succinct problems.
"The shorter the time horizon is, the more granular the data. Obviously, if we’re planning for tomorrow or the next day, we’re looking at it by SKU, by location level. But if we’re planning further out in time, for example, capacity planning six months from now or nine months from now — all of that data is also inside Rapid Response," Herzog said.
Harvey presents another test
After years of work, the planning team was put to the test again in 2017 when Hurricane Harvey devastated Southeast Texas and Louisiana.
Tide detergent is made in two U.S. plants — one in Lima, Ohio, and one in Alexandria, Louisiana. Alexandria was spared most of Harvey’s rain, but the system told planners that freight routes and deliveries in and out of the facility would likely be compromised. Days ahead of the storm, P&G transferred resources and people to the Ohio plant to keep a steady supply going out to customers so it could temporarily shut down the other facility.
"Not only were there no impacts from the hurricane on our supply chain, but we were prepositioned so that as soon as our customers were ready to receive products, we were ready to provide them," Herzog said. "As a result, we’ve been able to supply consistently when our competitors haven’t."
A speedy post-hurricane return to normal requires competitors to become collaborators to effectively manage inventory and cold chains.
After managing the long tail of recovery from Hurricane Maria, DHL's director of operations for supply chain services in Puerto Rico knows the value of preparing for the worst.
Storm outages and disruptions to the Port of Miami and Miami International Airport "may cause ripple effects" through global supply chains, according to a DHL Resilience360 report.