Local Floods Have Global Impact

This year, 2011, has been a year of tremendous natural disasters. It began with heavy rainfall in January in Queensland, Australia, and Rio de Janeiro Brazil, causing flooding, landslides, and crop losses. An earthquake in New Zealand followed in February, causing building collapses and an estimated $12 Billion in damages. Japan’s earthquake and tsunami in March resulted in the loss of an estimated 20,000 lives, massive destruction of buildings, loss of power and disruptions to transportation systems, a hurricane in the Eastern United States left 7 million people without power for days and many without power for weeks. Floods in Thailand that began in the summer and continued into December, flooded the capital, killed more than 500 residents and disrupted the lives of millions. In August, an earthquake rocked Virginia and shook buildings as far away as Massachusetts. And a rare October snow storm hit the North Eastern United States, leaving millions without power for days.

In all of this tragedy, there are some important observations:

1. Disasters will strike where they are expected, such as the earthquake in Japan, and where they are not, such as the earthquake in Virginia.
2. Disasters will strike when they are expected, such as hurricanes in the late summer, and when they are not, such as massive snow storms in the fall.
3. Localized disasters, such as the floods in Thailand, can have far-reaching effects, such as the global disruption of the supply chain for disk drives.

The science that enables the prediction of the location, the size and the effect of natural disasters is improving, but it is far from perfect. The local impact of natural disasters is increasing, because people and businesses are migrating into a massive urban areas. The global impact of natural disasters is increasing, because the supply chain is highly specialized into centers of expertise, but at the same time is globally interconnected and interdependent. Because of this specialization, a flood in a relatively small country can impact the global availability and price of products for which the country provides a single, but critical component.

Perhaps the most valuable lesson in all of this tragedy is that a highly efficient global operation that concentrates capabilities into unique centers of  expertise, leaves itself exposed to massive disruption from localized disasters and their impact on infrastructure and the workforce. One of our customers has reduced this risk by creating dual centers of expertise, separated not by hundreds of miles, but by half the globe. With the help of Axxana, these dual centers will operate not only highly efficiently, but 100% in synch. Perhaps it is time to re-think your strategy as well.