You’ll Sneeze If Your Suppliers Get the Flu

Supply chain

A simulation at MIT of an avian flu outbreak in China underscores the need for companies to consider possible supply chain disruptions as part of their plans for handling emergencies.

The simulation, hosted by the MIT Center for Transportation & Logistics in April, was played out before an audience by a panel of managers from companies such as Intel and Cisco who deal with emergency situations. Panelists took on roles within “Vaxonn ­Wireless,” a mobile-phone maker.

IT wasn’t represented on the panel, but that doesn’t mean technology won’t play a role in emergency management, says Ken Cottrill, a spokesman for the center. “In real life, the membership of an emergency response team changes as the situation progresses.”

Panelists reacted to news that two workers at the “Geeling Manufacturing” plant in China, where Vaxonn phones were being manufactured, had fallen ill with suspected cases of bird flu. The Chinese government quarantined the plant on and off during the outbreak.

The crisis, which was contained within a couple of days, occurred as Vaxonn prepared to release its new SlimPhone 360. The Vaxonn “emergency response team” kept in touch with the Geeling plant throughout the ordeal and also requested regular updates from the World Health Organization and the U.S. Center for Disease Control. The panel issued statements to reassure employees and customers, coordinated what to say to the media, and discussed whether a different manufacturer could make the phones. Panelists also dealt with the unseen Vaxonn CEO, who tried to wrest control of the emergency response—going so far as to announce the SlimPhone would be shelved.

While the scenario that unfolded wasn’t entirely realistic, the issues it posed are real. Besides the specter of avian flu, participants noted the upcoming Atlantic hurricane season (which begins June 1), recalled the aftermath of the September 11 terrorist attacks, and reflected on more ordinary situations such as power outages that can cause crises.

The main recommendation that emerged from the simulation is that all companies, no matter their size, should have a written plan for emergencies.

The plan can be general, but it is also valuable to contemplate scenarios such as a global pandemic that would lead to high rates of absenteeism and could require stockpiles of water, food, protective clothing such as masks, and the ability to house employees onsite if quarantines are imposed. Emergency plans also must encompass supply chain issues, taking into account scenarios that affect facilities a company relies on but that are outside the company’s control.

It’s best not to rely on a single supplier, said Tony Sundermeier, Intel’s customer logistics manager for the Americas, who played the roles of the logistics manager as well as the head of sales and marketing on the panel. “The cheapest way [to make a product] may be to sole-source, but that can also be the most expensive way if the sole source has to close down,” he noted. Sundermeier recommended that contracts contain “good exit clauses” in the event that an emergency means a company must back out of a contract.