MIT simulation suggests avian flu outbreak can shred supply chain

At first, the reports from your supplier in China seem innocent enough: an assembly line worker has become very ill and is hospitalized with flu-like symptoms. Before you know it, workers are dying, the government has quarantined your factory and its contents, your supply chain is in ruins, and reporters are camped out at your company headquarters with a fleet of satellite news trucks.

What happened? H5N1, that's what. The deadly new strain of influenza isn't just fodder for epidemiologists -- it's a serious threat to enterprises and to the entire global economy, according to a recent avian flu "business disruption simulation" conducted by the Massachusetts Institute of Technology's (MIT's) Center for Transportation and Logistics.

The day-long exercise just off the MIT campus in Cambridge, Massachusetts, used real business continuity experts from Arnold Communications, EMC, and Intel to test out the response of an imaginary cell phone maker, Vaxxon, to an H5N1 outbreak at a key supplier's factory in the imaginary mainland China city of "Geeling."

The simulation was led by Mary Pimm, of Intel's Corporate Emergency Operations Center, and revealed some of the challenges of dealing with a crisis like bird flu. During three simulated days, executives from Vaxxon struggled to get manufactured SlimPhone mobile phones out of quarantine and shipped to the U.S. market, quell fears of cell-phone borne viruses among dock workers in the U.S., keep their supply chain intact and address the health needs of employees quarantined inside the Chinese plant.

Companies should begin preparing now for disruptions like H5N1, killer hurricanes like Katrina and other disasters, according to Yossi Sheffi, director at the Center for Transportation and Logistics (CTL).

That means investing in communications and technology infrastructure that will allow as many employees as possible to work remotely, experts agree.

IT tools such as supply chain management play an important role in incident escalation and response, especially in global enterprises like Intel, said Steve Lund, Intel's CERT director and a participant in the simulation.

Companies need to plan out what they will do before a crisis erupts, even if they don't know exactly what the crisis will be, Lund said. 

"You have to take a proactive approach. Be paranoid and assume the worst can happen," Lund added. Even companies that lack Intel's global reach should consider what the impact of disruptions such as computer outages, avian flu, or unexpected plant closures could be, he said.

Disaster preparedness and business continuity planning can be a tough sell at companies, especially when no overt threat is staring them in the face, Sheffi said.

"One of the main problems with disaster preparedness is that people don't feel it in their gut. After all, if there's no disaster then there's no return. There's the "I" (investment) but the "R" (return) is not there," Sheffi said. 

H5N1 is a major concern for global container transportation company APL Ltd., said Hector Fulgencio, an attendee at the CTL event who is director of disaster recovery and business continuity at APL.

The company regularly conducts table-top exercises akin to the one by CTL and is considering issues such as how to cope with mass absenteeism and a spike in remote computing sessions that a bird flu outbreak would produce, Fulgencio said.