What Should be the Procurement Strategies for Companies while Combatting Natural Catastrophes?
The procurement theory is directly related to the methodology of procuring goods or services either raw or produced whether in a way that permits an organization to meet the requirements of its clients and customers in terms of the quality of the commodity and volume it is required in.
Procurement is one of the important processes in every business operation as not all organisations have the ability to obtain raw materials, have the capability to process it into distinct components and have the facility to assemble it into a sustainable commodity.
Philosophy of Supply Chain:
Owing to the need of dependability in the supply of raw materials and equipment, it instantly raises the question of what would happen if a fundamental network in the supply chain process be eliminated because of an unanticipated peripheral event. It would have an obvious result of the complete and consequent failure of the chain that would stop a product from being finished.
It is important to understand that the intrinsic challenges with carrying out a business in the present global structure is the fact that the unexpected conditions and situations like natural disasters have serious implications on the supply chains for nearly all companies.
Evaluation Process Diagram:
There is a high level of vulnerability in the production processes because of their reliance on a constant flow of raw materials and components. A skilled labour force and a continuous supply of energy to keep the manufacturing facilities running without the sourcing of raw materials will lead to the fall of the complete structure.
Every part of the product development supply is essential to make certain that the commodities that can be generated to fulfil customer demand. However, the innate issue with natural disasters is that they impact all facets of the production process which creates substantial hurdles for companies.
Influence of Natural Disasters on Supply Lines:
While there is an occurrence of natural calamities near zones or fields where manufacturing amenities are present, the sourcing of raw materials that is used in the production line gets blocked entirely. This is because the natural catastrophes block the availability owing to the destruction of roads and bridges which creates huge difficulties to receive the vital raw materials to the factories where the production process is carried out.
Another point that need to be mentioned is that the firms will also be hesitant to sent trucks to fields or areas instantly after a natural calamity because of the possibility of an abrupt reappearance. Additionally, it should be noted that the raw materials necessarily do not always get delivered from local dealers, instead, they can also be supplied from global sources.
The reason behind this problem is that the several docks and piers allocated for the unloading of cargo may have been impacted by the natural catastrophe itself develops difficulties in terms of receiving the raw materials from a ship and on the way to the manufacturing facility.
Besides, the natural disaster may have significantly damaged the areas or accommodations of suppliers or dealers of the raw material that would further obscure their ability to be able to supply raw materials to their different clients.
Impact on Manufacturing Capacity:
There have been several situations of natural calamity which discovered a susceptibility that contemporary day methodologies of production had wherein although a facility is based hundreds of miles away from where catastrophe really happened, there still may be the likelihood of that specific disaster impacting the capability of that plant or factory to manufacture products. This is primarily because of the impact that the natural calamity has on power networks and the fact that it can avoid the supply of critical parts and materials.
Analysing the Problem:
The main concern that a large number of companies have to face due to natural catastrophes is that they have to halt the production process in business based in the area where the calamity took place that impacts not only the workers, but also the entire facility and the volume of raw materials, and the suppliers to accumulate the important materials for their clients.
Minimal or No Destruction to Production Facilities:
Under such a situation where the natural disaster had minimal or no damage the supply line of a firm can be rebuilt within a period of two to three weeks during which the company itself manages the outcome of the disaster, that is, repairing facilities, restoring equipment and machineries, etc.
The company would also have to manage and rebuild the supply of raw materials to the factory, encourage the employees and workers to re-join the work and send commiserations to the families of deceased workers caused by the calamity.
Moderate Level Harm to the Facilities:
The mid-level harm to the facility, the adjacent machinery and probable flooding in specific areas are some of the instances that need to be dealt with during cases of moderate level harm to the production facilities.
In such a situation, the factory may take around one to two months to recuperate and begin with its operations. For consumers or purchasers, this indicates that they will either have to wait for the manufacturing process to begin again or they can move to a provisional supplier while waiting for the time that the original items provider is able to re-establish itself in their supply line.
Substantial Level of Damage to Facilities:
Damage at an enormous scale to the manufacturing facilities involves the devastation of the building itself along with around all the factory’s manufacturing equipment and machinery. In the course of such situations, it is doubtful that the company will be able to deliver anything for a year or more because it becomes important for the company to restructure and rebuild their facilities that were destroyed. For customers and clients, this requires re-creating a fresh supply line with an entirely new company.
Senior Content Writer at Procurement Resource
Prakhar Panchbhaiya is an accomplished content writer and market research analyst. With over 4 years of experience in content creation and market analysis encompassing many industries, including pharmaceuticals, nutraceuticals, biochemistry, healthcare, ed-tech, and Food & Agriculture, he has been creating quality content for multiple sectors. He is a Biochemistry major with sturdy backing in a PG diploma in digital marketing, helping in the exhaustive content creation based on extensive research and competitive marketing.