Effects of Catastrophes on Businesses - Assignment Example

First, I would use the company’s savings including available shares to repair and manufacture the damaged couplings. This, I will ensure is done within one week. The next important step is to increase the production of the other companies in different countries so that the supplies are maintained.

The company saves millions of dollars annually by reducing the number of warehouses and stores that would otherwise be needed for storing excess inventories (stocks). Another reason for preference of JIT is the fact that risks for producing excess products that would not be consumed after a very long time; the result is a reduction in the cost of input or production process.

From these catastrophic experiences mentioned above, it is evident that JIT has both its pros and cons during disasters. According to Miller (2011), producing fewer products means fewer losses when a disaster happens; this transfers to fewer losses to the company. On the other hand, lack of stocks for future distribution can lead disrupted supply chain which can translate to loss of customers or consumers.

For Caterpillar to avoid losses in case of any future catastrophes, the management should ensure that there is at least one warehouse made as a backup plan when there is an interruption in production such as a fire outbreak or power failure. The policies should indicate clearly how to set up times and lead times should be reduced to maintain profit and efficiency.