Whoa Tornado just hit my DC! Now what do I do??? Gerry Greenleaf Vice President Distribution & Transportation & Lou DeLorenzo Regional Director of Distribution TPA Supply Chain Conference January 23, 2012
Setting the Stage Play Dunn Video
Recovery Evaluate the Situation: Associate Safety Secure Facility Assess the Damage Create Assessment teams Associate/HR Facility Product Operations
Restoration - Phase 1 Creation of a Steering Committee for Oversight/Coordination Represent Key Areas: Operations Retail Loss Prevention Engineering Creation of Insurance Processing team
Restoration - Phase 1 Development of Inventory Plans Impacted Inventory @ DC Inventory Review and Recovery Inventory Disposition Reclaim/Disposal/Usable Inventory Accounting: Insurance USDA/FDA State, County, Town Create Inventory Rebuild Team
Restoration - Phase 1 Retail Service Plans: Cascade impacted stores (270) to adjacent DC s Reallocation of Assets People Tractors/Trailers Process for emergency orders to retail
Restoration - Phase 1 What Happened: Within 24 hours, all impacted stores were being serviced All emergency orders for impacted stores processed & delivered All incoming PO s diverted to supporting DCs Service Levels declined slightly (app. 3-4% for first month after event)
Restoration - Phase 1 What Happened: Inventory Build to replace loss product started Usable Inventory (Grocery) at impacted DC redeployed to supporting DCs starting Day 3 Temporary Facility security in place Disposition of Non-usable product Insurance Information (Inventory) verified
What Happened: Restoration - Phase 1 Community/Governmental contacts established and integrate into plans Impacted Associates communication process and support resources activated: Over 150 associates deployed to other sites within Week 1 Payroll and benefits continuation for impacted associates
Restoration - Phase 2 Getting Impacted DC back on-line Creating action plans based on assessment teams reviews: Associate/HR Sustainable communications process Coordination and planning to manage redeployed associates at supporting DCs to cover additional workload Product Tight inventory and capacity coordination for supporting DCs
Restoration - Phase 2 Getting Impacted DC back on-line Creating action plans based on assessment teams reviews: Operations Supporting on-site clean-up and facility restoration Preparing for operations restoration (Grocery) Facility Develop and Implement Grocery Facility Re-build Develop and Implement Office/Infrastructure Re-Build Develop and Implement Fresh Facility Re-Build
What Happened Restoration - Phase 2 Grocery Operations Created facility access/operations for 75% of building resumed shipping operations by Week 4 Created new design for infrastructure Enhance entrance and security Enhance associate spaces (locker room, break room, fitness/wellness facility, green spaces) Enhanced offices
What Happened Restoration - Phase 2 Fresh Operations: Extensive rebuild project required 9 months New refrigeration system New roof New rack and layouts (designed for current needs) Integrated a 57,000 sq. ft. fresh expansion into rebuild plans Successfully sustain Fresh distribution from supporting DC s for 9 months
Keys to Success Have a plan, continually review and update Create steering committee with clear decision making authority Leverage a project management mentality Break down work into managable elements Effort requires multiple work streams and resources
Keys to Success Create key action teams with clear focus Focus on recovery, restoration, people Involve the entire company you are not alone Communicate, Communicate, Communicate!!
A New Beginning
Business Continuity Planning
Business Continuity Objective Protect customers from the impact of a supply chain disruption Process Define a repeatable plan of action to speed communication and decision making in the event of a supply chain disruption
Scenarios Smucker Operation Smucker is responsible for development and implementation of the disaster recovery plan Outsourced Operation Third party plays a major part in developing and implementing the site level disaster recovery plan
Risk Analysis Likelihood Of Event Descriptor Highly likely Likely Unlikely Not Applicable Meaning A threat whose occurrence is probable in the next 1 year A threat whose occurrence is probable in the next 10 years A threat whose occurrence is probable in the next 100 years Not applicable No history or possibility of threat. Mark N/A on the Risk Analysis
Business Impact Risk Analysis Descriptor Catastrophic Major Minor Meaning Complete disaster with potential to interrupt all critical work processes (Plant Operations, Payments, Payroll, Customer Service, Close the Books, etc.) for weeks longer than Business Impact Limit Event that could cause an interruption to all/some critical work processes for days beyond the Business Impact Limit Event that will not threaten the Business Impact Limit.
Risk Analysis Categories Threats Likelihood of Occurrence Business Impact Risk Comments Site Snow/Ice Storms Likely Minor Low Equip. available to manage Local Key Suppliers Natural Gas Unlikely Major Low No disruption in site history External Suppliers Corrugate Unlikely Minor Low Alternate supplier and site qualified
Events Recent Smucker Supply Chain Disruptions 2005 New Orleans, LA Hurricane Katrina 2008 Memphis, TN Tornado 2009 Cincinnati, OH Hurricane Ike 2009 University Park, IL Tornado
New Orleans Katrina Impact on Coffee Production and Distribution
NOLA Hurricane Response Plan Tied to 5 day cone of probability, stand down if out of cone for 24 hours T-72, 48, 24, 12, 0 Checklists (from Phase I Evacuation) Ride Out Team for Category 3 and below On-site bunkers with supplies and tools for Ride Out Team Close relationships with local and federal authorities Pre-arranged recovery teams Ongoing site hardening and post analysis improvements
Overview Katrina Gentilly operating within 3 weeks: Location advantages near NASA Flood water did not enter the building Able to add on-site housing, potable water and gain site access quickly through good planning and aggressive action Lacombe had limited disruption Silocaf sustained limited damage to building and inventory Chef suffered minor flood damage
Gentilly After the Storm Interior Water Damage due to Roof Damage
Gentilly After the Storm Gentilly Village - 125 Trailers sleeps 500+
Lacombe After the Storm Lacombe becomes operational HQ immediately following storm
Memphis Mixing Center
Memphis Tornado - 2008 February 5 th - 6 p.m. Tornado strikes Memphis Mixing Center February 5 th - 11 p.m. Emergency Response Team call to align information and next steps February 6 th - 6 a.m. Emergency Response Team meeting to identify core teams and affirm go forward plan for Communication, Order Management, Quality, Risk Management, etc. February 6 th All orders moved from Memphis Mixing Center to ship from Cincinnati mixing center
Memphis Tornado - 2008 February 6 th -20 th Create new short term customer shipping territory from remaining mixing centers. Business preparation to accommodate new location February 25 th Go live with the short term Network April 1 st Lease signed on replacement building April 1st thru May 14 th Building preparation May 14 th First inbound receipt in new facility June 16 th First outbound shipment new West Memphis location
Mixing Center Regions Pre-Memphis Tornado Washington Maine Montana North Dakota VT Oregon NH Nevada Idaho Utah Wyoming Colorado South Dakota Nebraska Kansas Minnesota Iowa Wisconsin Missouri Illinois Michigan Indiana Cincinnati, OH Mixing Center Ohio Kentucky W. Va New York Pennsylvania M D Virginia NJ Del. R.I. Conn Breinigsville, PA Mixing Center N. Carolina San Bernardino, CA Mixing Center California Arizona New Mexico Oklahoma Arkansas Miss. Tennessee West Memphis, AR Mixing Center Alabama Georgia S. Carolina Fairburn, GA Mixing Center Texas Louisiana Florida
Mixing Center Regions Post-Memphis Tornado Washington Maine Oregon Montana North Dakota VT NH Nevada Idaho Utah Wyoming Colorado South Dakota Nebraska Kansas Minnesota Iowa Wisconsin Missouri Illinois Michigan Indiana Cincinnati, OH Mixing Center Ohio Kentucky W. Va New York Pennsylvania M D Virginia NJ Del. R.I. Conn Breinigsville, PA Mixing Center California Tennessee N. Carolina San Bernardino, CA Mixing Center Arizona New Mexico Oklahoma Arkansas Miss. Alabama Georgia S. Carolina Fairburn, GA Mixing Center Texas Louisiana Florida
Key Learnings Immediate response is the key to minimizing disruption Broad, cross-functional involvement ensures success Strong relationships with customers and suppliers allow for understanding and support Committed employees with deep business process understanding, working as a team, are able to deliver outstanding results in a time of crisis
Thank You!