The Aftermath of Tianjin: It’s Worse Than you Think
The global supply-chain impact of the August 2015 Tianjin, China, explosions extends far beyond that of a significant but routine logistics disruption. “Don‘t believe official media reports one week after the event indicating that business and Port of Tianjin operations will shortly return to normal,” says a white paper released by Resilinc, a cloud provider of supply chain resilience and risk management intelligence and analytics.
In the week following the Ruihai International Logistics chemical warehouse explosions, over 100 civilians were reported dead and even more injured. More than 50 still remained missing. Exposed warehouse chemicals threatened the safety and health of residents and businesses in and around the explosion site. Inbound shipments to the Port of Tianjin—especially those containing hazardous materials—were deterred or rerouted. More than 30 sites within a 10-mile radius of the explosion site faced supply chain disruption potential, according to the Resilinc report.
“Such unfortunate realities in the immediate aftermath of the Tianjin explosions offer only a small glimpse of the global supply chain impact that can be expected,” says Resilinc. “The less apparent and less visible ripple effects will be felt weeks, months and even years to come.”
Disasters such as the Tianjin explosions often have consequences which are much more severe than originally contemplated. And the full impact of such events can takes years to unfold.
Among the factors that will impact recovery speed for the commercial zone and affected companies, according to Resilinc, include the Chinese response as far as regulatory actions and their consequences for global commerce, and the supply chain risk management (SCRM) and resiliency strategies and maturity of affected companies.
Companies that take proactive measures to mitigate the risks of events like Tianjin, and have crises response playbooks in place, will recover faster, according to Resilinc. “In doing so,” the paper, concludes, “they achieve an immediate competitive advantage.”
SCRM and resiliency practices and tools can help companies proactively mitigate the risks posed by disasters, according to Resilinc, but they can help transform such threats into opportunities to help companies achieve a sustainable competitive advantage.
SCRM practices which allow companies to anticipate and better recover from supply-chain disruptions include mapping global dependencies inherent within their supply chains. Companies should identify the linkages between first tier, second tier, and third tiers suppliers, says the report.
Developing playbooks for response to incidents include proactively protecting the highest impacting and most vulnerable areas of the supply chain, transferring some of the risk to insurance providers for areas which are vulnerable but too expensive to mitigate, and developing an understanding of the true nature of the man-made disaster beyond media reports.
When a catastrophe hits, these companies can quickly assess potential damage and execute a response strategy that includes securing alternatives to production, shipping, and sourcing.
“Decisions to implement proactive SCRM practices and solutions to navigate—versus react to—such events as the Tianjin explosions,” says the Resilinc report, “will have the greatest long-term positive impact on a company’s performance, longevity and prosperity.”
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