Harvey and Irma Delivered Some Harsh Planning Lessons

Devastating hurricanes such as Katrina, Sandy and now Harvey and Irma are forces of nature that can’t be stopped by us mere mortals. But we can at least stop intensifying their impact through a lack of foresight.

Our hearts go out to the citizens of Houston and Florida as they dig out from the ravages of Harvey and Irma. But as the Economist reminds us, The US is by no means the only place to fall victim recently to catastrophic flooding. In India, Bangladesh, and Nepal, at least 1,200 people died and millions lost their homes after flooding caused by this year’s monsoon. Last month torrential rains caused a mudslide in Sierra Leone that killed at least 1,000 people. According to reinsurer Munich Re, storms and floods are becoming more common; there were about 200 in 1980 compared to more than 600 in 2016.

Floods also are becoming more impactful – largely because of increasing urban populations coupled with short-sighted planning practices.

In the case of Houston, unbridled building activity has destroyed much of the coastal prairie that is a natural buffer against flooding. Asphalt roads and parking lots limited the ability of the ground to absorb accumulating water. Lax regulations are partially to blame; lack of restrictions on building on ocean-facing lots, suburban sprawl leading to jungles of asphalt, and the conversion of vast tracts of land into suburban housing to accommodate the growing populations moving into urban areas. The Economist reports that Houston has had to accommodate an additional 1.8 million inhabitants since 2000. Florida’s population grew by 25 percent between 2000 and 2015 (adding 4.2 million people).

But it isn’t just the number of people moving into the Gulf states that has amplified the effects of storm-induced flooding; where individuals choose to live is another key factor. People flock to coastal zones, which tend to be landing sites for dangerous storm systems.

Again, this is by no means a Houston or Florida phenomenon. Cities worldwide – many located in prime target areas for natural disasters – are attracting more inhabitants. The United Nations estimates that in 2016, 54.5% of the world’s population lived in urban settlements. By 2030, urban areas are projected to house 60% of people globally, according to the UN. Moreover, one in every three people will live in cities with at least half a million inhabitants by that year.

How can we fortify these communities against monster storms?

An obvious response is more rigorous planning, to control the spread of irresponsible building projects, limit the paving of open spaces, and equip cities with infrastructure such as storm surge drainage systems that help them cope with floods. At the same time, cities should improve their supporting road networks – in particular, the provision of gasoline along existing routes – so that they can handle high traffic volumes when evacuations are called for.

From a supply chain perspective, it’s very difficult to anticipate the consequences of exceptional weather events such as Hurricanes Harvey and Irma. A more practical approach is to build resilience and flexibility into supply chains, so that when disaster strikes enterprises are in a much better position to literally weather the storm.

Encouragingly, many companies have become much better over the last decade or so at steeling their supply chains against adversity. To some extent this is due to the lessons learned from past disasters such as Hurricane Katrina in the US (2005) and the calamitous floods in Thailand (2011).

Some of these measures are described in my book The Power of Resilience: How the Best Companies Manage the Unexpected (MIT Press, 2015). For example, the 2011 Thailand floods inundated over 1,000 factories in the country, and contract manufacturer Flextronics (now called Flex) was one of the companies severely affected by the loss of production capacity. In response, the company used a color-coded system of categorizing components made in Thailand to winnow down a daunting list of 2,000 potentially disrupted parts to a short-list of just 100 high-priority parts. It then identified recovery strategies such as qualifying alternative sources and re-allocating inventory. Walmart has made its supply chain more resilient by building spare capacity into its network of distribution centers, so that if one facility is disabled others can fill the capacity shortfall.

It’s important to adopt such measures because corporate memories can be short when it comes to planning for disasters. The Wall Street Journal reported that some companies scrambled to find alternatives to the Port of Houston in the aftermath of Hurricane Harvey. Miami is also a major port, especially with its extensive ties to Latin America, and companies relying on that port had to endure operational disruptions. Although most large companies spread their imports over multiple ports to reduce the risk of disruption, many companies focus their distribution effort around large ports, such as LA/LB, Houston, NY/NJ, and Miami.

As described in my book Logistics Clusters: Delivering Value and Driving Growth (MIT Press, 2012), there are a number of reasons for concentrating cargo operations in this way. For example, this type of clustering can deliver economies of scale derived from risk pooling as well as high-service transportation at a lower cost. Cost-cutting generally is a significant incentive. As the Journal reported, “companies steer a bigger share of imports meant for stores and factories in nearby states to save on trucking and rail costs.”

A little foresight can go a long way when a natural disaster hits, whether we’re overseeing urban development projects or managing critically important global supply chains.