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On Walmart and Katrina

(from the 'Disaster' book again)

All over the web you can find stories glorifying Walmart’s role in the post-Katrina tangle and their ability to leverage supplies in a way that FEMA was unable to (Walmartfacts.com, Stephen Hibbs, an assistant Wal-Mart manager in Dallas is quoted: “After Hurricane Katrina, my father called me to let me know how proud he was that I worked for Wal-Mart. That’s exactly how I feel every day” ). It’s much harder to find mention of of government official Douglas Doan, who had the idea to tap Walmart as an emergency supplier.

“A few hours after the world first learned that the New Orleans levees had crumbled, the phone rung on Douglas Doan’s desk, at the Dept of Homeland Security in Washington. A very angry man from Walmart was on the line.”

Ray Bracy, the company’s vice president for federal and international affairs, was furious that the National Guard was looting Walmart and he wanted to know what Doan was going to do about it. But the National Guard were not being greedy. They didn’t have the supplies to give the people they rescued, so they were breaking into Walmarts to get them. The chainstore was “involuntarily serving as the region’s FEMA warehouse”.

Cops Looting

Doan broke with federal procedure by suggesting they change the term from ‘looting’ to ‘unusual procurement’. “Walmart’s supply and distribution system was the envy of the world. Could it be harnessed to provide the goods that FEMA seemed unable to deliver?” Walmart would keep track of what was leaving their stores using their sophisticated inventory system("Unlike FEMA the company had the ability to track every liter of bottled water delivered and taken from its stores”) and send the bill to the government later.

In Walmarts emergency command center, the director of ‘business continuity’ was busy co-ordinating their own contingency plan for their 89 flooded and damaged stores, with the help of managers, trucking experts and loss prevention specialists. “Johnson already had scores of Walmart trucks moving into the disaster zone, some under police escort, carrying more than forty generators and several tonnes of dry ice to deliver to stores that had no power but millions of dollars of perishable food in the inventory.” A replenishment team was reordering likely demand items like mops, bleach and water. Following Doan’s arrangement, over the next two weeks officials also tapped Walmart for tyres for the Port of New Orleans entire fleet of emergency vehicles and chainsaws and generators for rescues.

Katrina_-_Relief

“When the calls went up in Washington over Homeland Security’s disappointing performance, Doan saw the deal with Walmart as a shining example of a big, bloated bureaucracy showing a little creativity in getting the job done.” But Homeland security’s auditors were furious that they had received the bill for supplies distributed by nondepartment agencies like the National Guard and that the ‘detailed and unyielding’ regulations for procurement had been flouted. The Department threatened to pursue legal action against Doan, though it never followed through. In the end Walmart got a check for $300 000, “for the exact emergency supplies that were needed most.”

------------------------------------------------------------------------------------------

So how do Walmart's supply-chain logistics work?

"The company is revered for its efficient and highly centralized logistics, which have sometimes allowed it to capitalize on natural disasters. Learning from its database that during hurricanes people eat more strawberry Pop-Tarts, Wal-Mart has in the past responded to dire weather predictions in Florida by making sure stores in that region were stocked accordingly." (The Nation)

Walmart’s “Right Product, Right Place, Right Time” supply-chain strategy relies on techniques such as predictive-analysis software and RFI (radio frequency identification). The latter allows goods to be located along the entire process chain, "transmitting product information such as price, manufacturer, expiration date and product weight". "Managing orders can be optimized, losses reduced and out-of-stock situations avoided, assuring an even more consistent availability of goods for the customer." The data flows from the external tagging device into online planning and execution systems. Web-enabled trading networks are becoming ever easier to create with increased software synchronisation.

Predictive Analysis

Two recent Walmart innovations include the move “from a category-based network to a velocity-based network" where the fastest-moving, high-volume items are delivered to the store in one go. The retailer is also facilitating an initiative called “Store of the Community,” which is designed to distribute more unique product assortments to individual stores.

------------------------------------------------------------------------------------------

What did the critics say about Walmart's role during Katrina?

The left-wing paper the Nation was irritated with the hype over Walmart’s superior performance. “According to the conservative wingnuts at the Wall Street Journal editorial page, the superiority of Wal-Mart's Katrina response shows that the private sector is simply more effective than the government. Well, yes, oddly enough, when you starve a government by draining its resources and electing officials who don't believe in it, nothing seems to work. Companies like Wal-Mart play a major role in that eviscerating process. Not only does Wal-Mart give more than two-thirds of its political contributions to anti-government Republicans, it weakens local infrastructure by draining public coffers. According to the advocacy group Good Jobs First, Wal-Mart has received more than $1 billion in public subsidies just for building its stores (not counting the cost to state and local governments of picking up healthcare costs of Wal-Mart employees). And Sam Walton's heirs, through their family foundation, are lobbying vigorously for the abolition of the estate tax, which will almost certainly weaken the government's ability to respond to future Katrinas.”

------------------------------------------------------------------------------------------

Indirectly related:

More on Douglas Doan: As an ex-military/investment banker, he had a reputation for using business enterprise to help government security in areas like the global shipping industry. “Companies like Walmart wrote the book on supply chain security. Why should the government reinvent the wheel?” In 2005 he helped Mexican melon farmers to create their own road across the border when increased security checks meant they were losing their produce to the heat. He was also the first man in Virginia to cultivate cigar tobacco in 150 years. After the Walmart affair, ‘undaunted’ he came up with another plan to get local restaurants back on their feet, by contracting them to provide an alternative to the packaged food that was being shipped in from Florida and Ohio for $14 per storm victim per day. Despite the plan of local chefs to provide seafood pasta and beef with red wine sauce for $13 a day (a total savings of $26000 a day), the plan was cancelled by auditors for violating “long standing contracts for peanut butter sandwiches and canned beans”. On quitting his position, Doan said of the government bureaucracy: “If 9/11 represented a failure of imagination, then four years later we have yet to learn our lesson.”

Fortune 100 companies were meant to be linked to the government by CEO COM LINK, a secure communications network that could connect CEOs with senior White House officials in 30 minutes. It was initiated after 9/11 when AT&T lost a major communications node, FEDEX had all of its delivery air fleet grounded and Home Dept had boots resistant to the heat of smouldering debris, but couldn’t reach anyone to offer its supplies. After Katrina many CEOs ordered their staff to inventory resources they had to share but most were unable to reach anyone yet again. “The member companies of the International Bottled Water Association repeatedly called the DHS offering to send truckloads of free drinking water into the region. It eventually used church groups instead to ferry 10 million bottles into the disaster zone.”

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