Careful contingency planning and an all-hazards approach to assessing risk enabled Arkansas-based Wal-Mart Stores to respond in exemplary fashion to the March 11th earthquake and tsunami in Japan, first by quickly restoring its own in-country supply chain and then by delivering much-needed food, water and relief supplies to the worst-hit areas along Japan’s northeastern coast, even as the Japanese government continued to struggle with its own disaster response.
At the time of the 9.0-magnitude offshore quake, the U.S. retail giant had 414 stores in Japan, all operating under the Seiyu brand (photo, right). Of those, 24 Seiyu stores employing 1,889 people were located in the Sendai and Fukushima areas closest to the epicenter. Only two stores were badly damaged in the quake and the company lost only one employee in the massive tsunami that followed – extraordinarily low numbers given the regional death toll and physical devastation.
The Wall Street Journal recently ran an illuminating article on Wal-Mart’s disaster response operation. In describing the company’s approach to risk management, it notes that at Wal-Mart headquarters in Bentonville, “a team of experts that includes a meteorologist sizes up potential threats and works with local and national governments and aid groups on contingency plans.”
With such plans at the ready, Wal-Mart was able to respond quickly despite the damaged stores, shell-shocked employees, empty shelves due to panic buying, a region-wide power outage, fuel shortages and severely degraded telecommunications. Among other notable achievements, employees from the 22 undamaged stores were handing out food and water from their parking lots just 12 hours after the Friday quake, and Wal-Mart execs chartered a Chinese plane and had delivered 10 tons of water, flashlights, batteries, blankets and food by the afternoon of Wednesday, March 16th.
Wal-Mart owes its risk management acumen at least in part to plenty of prior disaster experience, including a massive earthquake in China, wildfires in California and of course Hurricanes Ike and Katrina. Alex McLellan, a Principal Analyst at the Homeland Security Institute who has studied Wal-Mart’s Katrina response (photo below), found for example that 66 percent of its stores in the affected region had reopened within 48 hours, and 93 percent were back in seven days.
McLellan, who presented his Katrina findings at a conference hosted by the Security Analysis & Risk Management Association (SARMA) last October, calls this kind of bounce-back the “agile systems approach to organizational resilience.”
His thesis is that “organizations can improve their capacity to adapt to disruptions from all sources, to include disruptions to business activities that occur as the result of everything from disasters and emergencies to marketplace volatility. By developing agility, organizations can improve their resilience and preparedness.”
It’s a theory that could be applied just as easily to a government as to a large commercial enterprise.
(All photos courtesy of Wal-Mart)
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