Saturday, September 24, 2005

Wal-Mart and Hurricanes Wal-Mart and Hurricanes

Thomas Friedman in his book, "The World is Flat: A Brief History of the Twenty-First Century" looks at how the world is changing as it "flattens". One of the companies that he talked about was Wal-Mart. The company has become the largest retailer in the world through, in particular, by far, the best inventory management system.

Well, as hurricane Katrina was moving towards the Gulf Coast, Wal-Mart had semitrucks rolling into the area with extra generators, water, canned goods, and the like. This was all happening while the governor of LA and the mayor of New Orleans were dawdling about what to do.

It may look like altruism, but it wasn't. It was just good business. It was maximizing sales through the best just-in-time inventory system on the planet. It turns out, according to Friedman, that they always do this in anticipation of hurricanes. They have meteorologists on staff who watch hurricanes very closely. And they know by now, from experience, just what is usually needed (and thus, bought) right before and right after hurricanes. And so, they pre-surge these items in preparation for hurricanes.

Obviously, they weren't able to pre-stock all the water that would be needed this time. But, it wasn't their responsibility, and they did far, far, better at it than did the governments of LA and NO whose responsibility it was.

I should also note that we saw evidence of this system at work throughout the recovery from the hurricane too, as they were one of the private agencies able to bring the right stuff there fastest.

So, I have no doubt that as the people in Texas are evacuating from the imminent arrival of hurricane Rita today, that the Wal-Marts in that area have also had their hurricane necessities massively augmented, with more trucks on the way.

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