Impact of Disasters on Firms in Different Sectors: Implications for Supply Chains

Abstract

Disasters keep damaging infrastructure, disrupting supply chains and affecting firm profitability. There is an urgent need for better understanding of disaster impact on supply chains but very few publications address this issue. This exploratory study takes an indirect approach and investigates disaster impact on firms in various industry sectors. This approach allows us to take full advantage of large secondary data bases of firm and disaster data in order to analyze the impact of over 3,500 disasters on more than 100,000 firm‐year observations over 15 years. Our results indicate that disasters impact all sectors within a supply chain. We found that damage by windstorms and floods seem to be dramatically different from that of an earthquake, providing evidence against the all‐hazards approach. We also show that the impact of floods on total asset turnover of a firm is dependent on the firm's position in the supply chain. We found that while upstream partners enjoy a positive impact, downstream partners have to plan for the opposite. Supply chain managers can use our results to better understand disaster impact on their business. Our study suggests a supply chain–wide mitigation strategy rather than a company‐specific one.

Local Resources and Procurement Practices in Humanitarian Supply Chains: An Empirical Examination of Large‐Scale House Reconstruction Projects

“…Finally, given that humanitarian crises, particularly reconstruction projects, are not only contextually (in terms of different events) but also geographically and culturally affected we believe that more case study research (both primary and secondary) is needed. Altay and Ramirez (2010) indicated the importance of reconstruction from the perspective of local business. An important aspect here is the restoration of local business in order to mitigate the disruption a disaster caused in any supply chain.…”

“…In fact, a number of post-disaster studies in HSCs are based on program evaluations and secondary data analysis for the same reasons (e.g. Pardasani, 2006;Banomyong, Beresford, & Pettit, 2009, Altay & Ramirez, 2010, Tomasini, 2012). This paper is based on the analysis of secondary data as reported in the European Agency of Reconstruction (further denoted as EAR), which evaluated studies of two HRPs in Kosovo and the FYROM.…”

“…The rotation of cash in the local economy made the construction business boom, and has thus had an important impact on economic progress. Altay and Ramirez (2010) indicate this to be a general effect of reconstruction on the local economy also from the business perspective.…”

“…Tomasini and van Wassenhove (2004), for example, show how local sourcing of maize in Southern Africa increased local price levels, while it simultaneously revived otherwise moribund local industries and transportation. Altay and Ramirez (2010) see reconstruction as a way to increase local economic activities overall but Balcik et al, (2010) indicate that strong post-disaster competition for supplies inflates local prices, yet local sourcing eliminates the need for costly transportation of (globally sourced) items to the disaster area. Also, regional prepositioning reduced transportation costs to the disaster area to the extent that the cost reduction outweighed inventory carrying cost (Jahre & Heigh, 2008).…”

Cultivating climate change resilience in agri-food systems: responses to natural disasters and emerging climate risks in Queensland’s fresh produce supply chains

“…This requires integration of business processes (Altay and Ramerez, 2010), collaboration, and inter-organisational alignment (Pettit et al, 2010, Seth and Randall, 2005, van der Vorst and Beulens, 1999, Vlajic et al, 2012. Juttner (2005, p. 122) argues that the management of risks in supply chains: must have a broader scope than that of a single organization and provide insights regarding how the key processes have to be performed across at least three organisations … it should be recognized that coordination and joint effort rely on dependency, bargaining, negotiation and persuasion across organizational borders and is inhibited by goal incongruence.…”