Executive Update

Business Continuity in the Wake of Natural Disaster

Delhaize America’s Gerry Greenleaf, vice president of distribution and transportation and Lou DeLorenzo, regional director of distribution, joined by J.M. Smucker’s Denny Armstrong, senior vice president of supply chain logistics and operations support and Charles Hann, corporate warehouse manager, all shared with attendees their experiences dealing with planning, recovery, restoration and re-activation of facilities within their supply chains following a natural disaster.

In 2011, Delhaize lost a Food Lion distribution center (DC) serving 270 stores in the area, to a tornado. Delhaize’s immediate action, which included assessing the situation and damage, creating a steering committee for oversight and coordination, creating an insurance processing team and developing inventory and retail plans had lasting results. 

Within 24 hours, all 270 stores were being serviced by other DCs, all emergency orders were processed and delivered and all incoming product orders were diverted to supporting DCs.

According to Delhaize, the first and most important step in preparing for any natural disaster is to have a contingency plan ready, and to continually review and update that plan.

 “We had a contingency plan that was already prepared, so we put that into motion,” said DeLorenzo. “We also had teams established to help take care of all of things. We couldn’t have done it without them.”

The DC created action plans and began the rebuild process, only dropping service levels by three to four percent the month after the disaster. By day three the usable inventory was redeployed, after one week over 150 associates were deployed to other sites, and shipping operations were resumed by week four.

By following the plan, involving the entire company and communicating properly, Delhaize was able to focus on recovery, restoration and people and are now in the process of creating an entirely new DC.

Smucker has also dealt with multiple natural disasters over the past decade, including Hurricane Katrina in New Orleans in 2005.

Like Delhaize, they also focused on creating contingency plans, which they based on risk assessment - focusing on both the likelihood of an event occurring and the business impact it would have.

With the hurricane response plan in place, which included set checklists, on-site bunkers and supplies, close relationships formed with local authorities, and pre-arranged recovery teams,  Smucker had their Gentilly branch operating within three weeks after Katrina. 

The main lessons Smucker gained from these natural disasters are that an 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; and committed employees with a deep business process understanding and that are willing to work as a team are able to deliver outstanding results in a time of crisis.