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.

The MIT simulation made for good theater at times, with convincing and breathless TV news bulletins from fictional CNN look-alike “CTL,” including one report titled “Factory Under Siege!” about the quarantined Geeling plant. Reporters and company executives wrestle with conflicting information on the outbreak: Did the workers contract the flu from another human or from poultry? Could H5N1 survive on cell phones shipped from the plant? Was the outbreak limited to workers at the Chinese supplier or is the scope wider?

In one of the more amusing anecdotes, CERT members from Vaxxon try in vain to reel in a rogue executive who may have been exposed at the supplier’s factory but ignores requests to stay put, touching off a minor civil emergency back in the U.S. after he returns to work at the company’s headquarters — possibly infected with H5N1.

With representatives from marquis corporations including Campbell’s, Cisco Systems, General Motors, Michelin, and Procter & Gamble in the audience, the MIT simulation ultimately delivered a somber message: with the extent of the outbreak still unknown, Vaxxon’s CEO steps in to cancel production of the much-heralded SlimPhone rather than risk tarnishing the company’s image further.

Overreaction of that type is common, as executives look beyond an immediate problem to the legal fallout that will inevitably follow, Sheffi said.

“CEOs might overreact so that nobody could second guess them after the event — question whether they were downplaying the threat because of greed,” Sheffi said.

Disaster preparedness also means forging relationships in local communities where your company operates so that you know who to reach in an emergency, according to Sheffi.

“Get to know your congressman so that they’ll take your call and it won’t be just a piece of paper on their desk,” Sheffi said. “Develop relationships with the local fire chief or hospital administrator. Go to lunch with local hotel managers so that if you have to put your people up in an emergency, you’ll have a relationship with them.”

But even the best laid contingency plans will go out the window should a true global pandemic — of H5N1 or some other disease — really erupt, Sheffi said.

“If we get to a global pandemic, there’s little that individual companies can do. At that point, business problems fade away and it’s FEMA and the CDC (Center for Disease Control) that will call the shots, with the main issues being health and safety,” Sheffi said.