Hurricane Katrina Revisited: 3 Corporate Crisis Management Plans that Worked
Stephanie Dula 27 Aug 2015Could your organization survive a major disaster on par with Katrina? As we approach the 10th anniversary of one of the most devastating natural disasters to impact the United States, we’re revisiting this tragic period in American history and all the lessons it holds for supply chain management, logistics, and corporate crisis plans. Looking back, we can find a few notable instances of private sector preparedness that paid off in the aftermath of the storm, even amidst the enormity of the logistics challenges facing the Gulf Coast.
Perhaps the most well-known story of corporate disaster response success came from Walmart, which is famous for extensive supply chain crisis training. A supply chain executive once told staff to pretend that a particular distribution facility had burned to the ground. They had until the end of the day to figure out how to service their stores without depending on the destroyed facility or its staff members. It’s clear that training like this paid off during the horrific Katrina aftermath. Walmart was able to deliver an unrivaled $20 million in cash donations, 1,500 truckloads of free merchandise, and food for 100,000 meals directly into the hardest-hit areas after the storm hit. Clearly Walmart’s massive scale and prevalence of stores throughout the area helped, but the organization had also mastered the art of preparedness, which helped them react quickly and efficiently while other organizations floundered.
What are some of the other corporate crisis management plans that helped communities in the area during the disaster, by not only continuing services for their customers but by maintaining employment for their staff?
Related: See Lt. General Russel L. Honoré, Commander of Joint Task Force Katrina, speak live about fostering a ‘culture of preparedness’ at INNOVATE 2015: The Purchase-to-Pay Innovate Summit in New Orleans, Sept 12-14.
Mississippi Power
Hurricane Katrina was the biggest operational challenge ever faced by Mississippi Power, a subsidiary of Southern Company. The storm wreaked havoc on the lives of the 1,250 Mississippi Power employees and their communities, destroying homes and, in some cases, entire neighborhoods. All 195,000 Mississippi Power customers were left without power after the levies broke following the hurricane.
Speaking before the Senate Committee on Homeland Security and Governmental Affairs later in 2005, Southern Company President and CEO David Ratcliffe noted that Southern Company’s efficient, coordinated response to Hurricane Katrina — which saw power restored in just 12 days — was possible in large part because of its “vertically integrated” structure. Vertically integrated utilities are defined as companies that perform all three functions of generating, transmitting and distributing electricity for their customers. The 12-day repair was completed well ahead of the original four-week estimate.
How did they do it? The company chalks it up to a thorough crisis management plan that left little room for confusion. Long before the storm, the company assigned 20 “storm directors” with clear responsibilities: transmission lines, logistics, security, etc. A decentralized decision-making structure gave individual employees the power to act quickly, and in some cases, improvise. “The results were entrepreneurial. One crew chief stripped a generator off an ice machine to get a substation working. Other crews scavenged parts from fallen poles. Costly purchases were made instantly over the phone,” wrote Dennis Cauchon of USA Today.
Lt. General Russel L. Honoré, Commander of Joint Task Force Katrina, will be a keynote presenter at INNOVATE 2015: The Purchase-to-Pay Innovate Summit in New Orleans, Sept 12-14.
Proctor & Gamble
Procter & Gamble (P&G) represents another preparedness success story to come out of the post-hurricane period. Two of P&G’s four major coffee producing facilities in the area were located in Orleans Parish, an area that sustained some of the most significant flooding. Access to these facilities was restricted to helicopter only during the first weeks immediately after the storm, and yet despite all these obstacles, P&G was one of the first area businesses to resume operation.
P&G’s success can largely be attributed to innovation and, again, a well developed response plan. Without local water access, the company managed to drill a well on property. They also relied on an extremely sophisticated system of emergency measures they had spent years practicing and perfecting. “Hurricanes entering the Gulf of Mexico automatically trigger a transfer of inventory to distribution centers outside the New Orleans area, the sending of inventory backup tapes to headquarters in Cincinnati, Ohio, and the advent of hurricane shutdown procedures.”
Gillis Ellis & Baker
After Hurricane Ivan passed close by New Orleans in 2004, The Gillis Ellis & Baker (GEB) management team faced the reality that they were not adequately prepared if a similar storm should hit the city. The insurance firm employed 37 people in the area, and their families and their 3000+ customers were depending on the agency’s ability to withstand a disaster. GEB disaster plan coordinator Douglas Mills realized quickly that the primary focus of any good plan would be a backup office facility and the including our entire IT infrastructure needed to run the office. Luckily, Mills was put in touch with Agility Recovery solutions, which provides temporary mobile units and replication of an entire office IT infrastructure in the event of a disaster. GEB entered into contracts with Agility and Artizan Internet Services in the summer of 2005, just a few months shy of Katrina’s devastating landfall.
Within one week of landfall, GEB had an established temporary office in Baton Rouge and was able to handle 3,000 claims and over 10,000 calls. All of this was possible thanks to Service 911 they had set up through Artizan Internet Services. Artizan changed their home page to include a phone number to the Artizan’s call center, GEB clients were able to speak with a live person who had been trained to handle customer service for GEB.
“Pre-planning could very well make the difference in whether your agency lives or dies,” said Mills, who now speaks to groups of agents around the country. “You cannot feel that your agency is secure if you haven’t made a disaster plan and secured the resources to be able to implement it. In today’s environment, from chemical spills to nuclear accidents, to a terrorist attack, you’re deluding yourself as an agency principal if you think something like this can’t happen to you.”
We know now that for every company that managed to weather the storm, hundreds more were not able to withstand the widespread economic disruption it caused. It’s a good time to reassess how our own institutions are prepared for disaster, natural or otherwise. In the spirit of preparedness, Lt. General Honoré, Commander of Joint Task Force Katrina, will present our keynote address this year, directly from New Orleans at INNOVATE 2015: The Purchase-to-Pay Summit, exactly ten years after the historic disaster. To learn more about fostering a ‘culture of preparedness’ in your organization, register now to see the “Category 5 General” speak live!
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