Publix Super Market and the Effect of Hurricanes - Research Paper Example

Hurricanes result to enormous damages and devastation within the local communities. These natural disasters tend to deter and disrupt supply chains of major products due to the damages inflicted on infrastructure such as roads, rails, and communication channels. Consequently, businesses (especially those that operate a Just-in-Time manufacturing methodology) incur significant supply shortages that run for long durations, resulting to losses due to lost revenues. Other losses emanate from damage on goods and insurance claims that may run into hundreds of million of dollars.

One such business that experienced huge losses in the 2004-2005 hurricanes in Miami, Florida is Publix Supermarket and its chain of stores. This paper seeks to examine the effects of external events to a business, drawing from the impacts of hurricanes on Publix supermarket, especially the disruption of its supply chain, damages to goods, and insurance claims (Publix AMC). Publix Supermarket Inc is an employee-owned chain stores operating primarily in the United States. The company has grown rapidly since its establishment to dominate the retail industry in Florida and the US at large, operating 1086 retail stores, 8 centers for grocery distribution, and nine brand-manufacturing facilities.

The product portfolio of the company is majorly grocery, foods and beverages, and other finished products, groceries and food products being dominant. With the headquarters in Florida, the retail giant has over 757 stores, with a grocery distribution center in Miami (Publix AMC). The company has a solid establishment in the Florida region, but the fact that the area is prone to hurricanes and tornadoes downplays its development. Due to the delicate nature of its products portfolio, Publix operates a primarily Just-in-Time manufacturing method.

This production methodology emphasizes on problem solving and waste reduction for continuous improvement, thus improving organizational performance. The fundamental principles include having adequate inventory only, improving quality, reducing setup time and queue length, and reducing costs. This production method has quality and cost benefits, but the most significant challenge is supply chain disruptions. Supply chain disruptions occur because of failure of one element of the supply chain and the subsequent failure in the rest of the chain.

There are two categories of supply chain risks: disruption or operation. Operational risks refer to uncertainties such as uncertainty in costs, customer demand, and supply. Disruption risks are associated with economic crises or manmade and natural disasters. This paper focuses on the disruption risks in the supply chain of Publix Supermarket Inc. In Miami, the most significant disasters are hurricanes. About eight years ago, the region experienced three catastrophic hurricanes in barely two month, with hurricane Charley in August 13 2004, hurricane Ivan in September 2004, and hurricane Jeanne in September 2004.

The impacts of the events were enormous to the people and business in that community. Among the most affected was Publix Super Markets, recording well over $60 million in product losses alone (SEC 17). According to the organization’s Form 10-K submission for the fiscal year 2006 to the US Securities and Exchange Commission, the 2004-2005 hurricanes had significant financial