applying contingency planning processes to supply ...

APPLYING CONTINGENCY PLANNING PROCESSES TO SUPPLY CHAIN DISRUPTIONS: A SERVICE PROVIDER'S RESPONSE TO HURRICANE KATRINA Joseph B. Skipper Auburn University Joe B. Hanna Auburn University Brian J . Gibson Auburn University

The views expressed in this presentation are those of the author and do not reflect the official policy or position of the United States Air Force, Department of Defense, or the U.S. Government.

ABSTRACT Environmental disruptions can have a tremendous effecton business operations. This is especially true i n the supply chain where the ripple effect is felt far from the actual location of the disruption. Utilizing one extreme example, Hurricane Katrina, as the setting, this study examines the impact of a n environmental disaster on a large service provider, Alabama Power. The paper describes Alabama Power's use of a contingency planningprocess i n a n effort to prepare for and manage the afternzath of a tremendous disruption a s well a s incorporate lessons learned from this event into planning for the next event.

INTRODUCTION The risks of, and impacts from, environmental disruptions on businesses are tremendous. As we continue to progress towards a n increasingly global marketplace, the risk of a potential business disruption tends to escalate. The ability to manage these disruptions and develop effective continuity response plans in the event

of a disruptioninvolves resources, a dedication to planning, and early involvement of key participants (Zsidisin, Melnyk, and Ragatz, 2005). Risk management has placed many professionals in an unfamiliar and relatively new territory, forcing the application of new techniques (Elkins e t al., 2005) and highlighting the need for improved visibility and communication (Christopher and Lee, 2004). Fall 2007

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Given the large potential impact on business from a disruption, interest in, and application of risk management tools is expanding. One of the many challenges for businesses today is to plan, control, and monitor the potential risks associated with uncommon or undesirable business interruptions. Ultimately, to be highly effective in a constantly changing marketplace, a business must have a contingency plan that incorporates the identification and valuation of various risk events, the probability of occurrence, and the firms' contingencies for alternative actions. Clearly one size does not fit all in the management of potential risk. With a better understanding of the causes, identification, assessment, and management of risk has come the realization that there is no single method of controlling the risk of a disruption. Recent natural disasters such a s Hurricane Katrina and the typhoon in the Indian Ocean have highlighted the need for better disaster preparedness planning (Alff, 2006; Hale and Moberg, 2005). Therefore, the remainder of this effort focuses on integrating key research studies in with an illustration of how Alabama Power successfully utilized a contingency planning process in disaster recovery efforts to achieve dramatic and positive results immediately subsequent to Hurricane Katrina.

BACKGROUND Hurricane Katrina struck the Gulf Coast a s an extremely large Category 3 storm on the morning of August 29, 2005. The storm surge from Katrina caused catastrophic damage along the coastlines of Louisiana, Mississippi, and Alabama. In Louisiana, the surge breached several levees separating Lake Pontchartrain from New Orleans, ultimately flooding about 80% of the city. With damages estimated a t $75 billion, Katrina was the costliest hurricane in United States history. In addition to the financial devastation, the storm killed 1,417 people, making i t the deadliest U.S. hurricane since 1928.

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While publicity was heavily focused on the large metropolitan area surrounding New Orleans, damage was far reaching across the region. Record storm surges smashed the entire Mississippi Gulf Coast, peaking a t 34 f t in Bay St. Louis, Mississippi and reaching 13 feet high as far away as Mobile, Alabama. The extensive storm surge contributed to massive, wide spread damage. Over 1.2 million people were under an evacuation order before Katrina hit land. Less than a day later, the levee protecting New Orleans began to fail, and within days, residents were forced to evacuate the city, as many roadways became river ways. Similar evacuations took place along the Mississippi and Alabama Gulf Coast regions as well as in many inland areas. Ultimately, more than 1.5 million people were displaced, a major crisis on a scale unseen in the U.S. for many years. Images of damage to a wide area encompassing both major cities and small towns were prevalent immediately after the storm. Unfortunately, the bad news did not end when the storm made landfall along the coast. Months after the storm, pictures continued to show the massive and widespread devastation Katrina left behind. Relief efforts to assist people remained in effect for months after Katrina dissipated. Response teams continued to struggle to overcome the large-scale destruction left by the aftermath of the storm. Coastal areas were the areas hardest hit. However, wind damage, heavy rain, and large-scale flooding were all reported hundreds of miles inland from the coast. Along the Gulf Coast, wind gusts were clocked in excess of 115 mph in Pascagoula, Mississippi, and over 100 mph on Dauphin Island, Alabama. Farther inland, Mississippi experienced wind gusts of 100 mph and higher as far north as Hattiesburg. In Alabama, wind gusts topped 50 mph as far north as Birmingham. Federal disaster declarations blanketed 90,000 square miles of the United States, an area almost as large as the United Kingdom. The

hurricane left a n estimated three million people without electric power, severely hampering rescue efforts and hindering their ability to function. Soon after the storm ravaged the coast, Homeland Security Secretary Michael Chertoff described the aftermath of Hurricane Katrina as "probably the worst catastrophe, or set of catastrophes" in the country's history. Katrina's economic impacts may be more lasting and far reaching than typical natural disasters due to the severity of damage and the unique geography of the region affected. By blasting New Orleans, the storm hit a vital organ of the U.S. economy-a concentration of ports, rail lines, barge traffic and major highways making up one of the nation's major trade hubs. While it is still too soon to determine the exact long-term business impacts of Hurricane Katrina, short-term impacts have already been tremendous. In the six months immediately after Hurricane Katrina struck, the U.S. Small Business Administration approved $5.2 billion in disaster loans to over 73,000 homeowners, renters, and small businesses in Texas, Louisiana, Mississippi, Alabama, and Florida (DHS, 2006). While all business areas in the region were affected, several key industries and infrastructures were considered particularly vital due in large part to the ripple effect felt throughout the entire U.S. economy.

DISRUPTIONS The amplification of the economic ripple effect is demonstrated in the supply chain. The impacts of environmental disruptions such as Hurricane Katrina have been well documented. Studies of product availability and demand fluctuations (Scott, 1981), changes in technology (Iyer, 1996), and labor market impacts (Wiseman and GomezMejia, 1998) have all demonstrated the wide spread impact of a single disruption across the supply chain. Additional studies have identified the impact of long lead times, stock outs, and cost on firm performance DIN (Riddalls and Bennett, 2002).

Many organizations have increased their dependency on one another in an effort to augment their own internal capabilities. These leaner efforts result in the reduction of waste and inventory buffers, but also have a dark side of higher disruption risk and severity (Zsidisin, Ragatz, and Melnyk, 2005). Additionally; lean supply chains often involve the elimination of redundant capabilities, providers, and resources. This can lead to situations where a single point of failure in the supply chain can have farreaching effects. When an organization makes the decision to give up part of its autonomy by working with other firms, its fortunes meld with its partners (Spekman and Davis, 2004). One challenge of supply chain management is to plan, control, and monitor these intersections between the organizational partners (Sinha, Whitman, and Malzahn, 2004) and to understand where, what, and how points of failure can impact the chain.

IMPACTS OF SUPPLY CHAIN DISRUPTIONS Hurricane Katrina, along with previous damage caused by Hurricane Rita, impacted over twenty ports in the Gulf of Mexico. For several ports, including New Orleans, the impacts were considerable. Some of the facilities were damaged beyond repair while others required extensive rebuilding efforts before they would again be suitable for commercial use. Maritime trade drives, or contributes to, many important facets of many U.S. industries, causing a tremendous ripple effect throughout the economy. U.S. ports and waterways handle over 2 billion tons of cargo annually with much of that commerce flowing through the Gulf Coast ports of Texas, Louisiana, Mississippi, and Alabama. Port infrastructure damage had a dramatic effect on the U.S. petroleum, grain and farm products industries, as well a s the fruit, poultry, coffee bean, chemical and steel trades. For example, the Port of New Orleans, which was nonfunctional immediately after Katrina, typically serves a s a focal point for cargo to 28 states, supporting nearly $37 billion in economic Fall 2007

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benefits. As ports in the Gulf coast region were damaged, the impact was felt globally. Not only was the U.S. economy impacted, but with over half of the grain exports for the U.S. departing from ports directly impacted by Katrina, foreign markets counting on U.S. grain to feed their citizens also suffered severe negative impacts.

Service Supply Chain Response In no other organization was the impact of Katrina potentially more devastating t h a n for Alabama Power Company. Alabama Power is the second largest subsidiary of Southern Company, the nation's largest generator of electricity. Alabama Power serves 1.3 million homes, businesses and industries in the southern twothirds of Alabama. More t h a n 78,000 miles of power lines carry electricity to customers throughout 44,500 square miles. Roughly 24 hours after Katrina's initial landfall, Alabama Power's peak outage occurred a t 6:30 a.m. on Tuesday, August 30, 2005, As Katrina barreled up the Alabama-Mississippi border, it left 636,891 Alabama Power Company customers in the dark, representing almost half of the company's total customer base. By sheer outage numbers, this storm was the second-largest in the company's history, second only to September 2004's Hurricane Ivan with 825,000 customer outages. According to Alabama Power statistics, 1,914 miles of power transmission lines were out of service, roughly 1 5 percent of the total line length maintained by the company. The transmission lines are vital to the power distribution infrastructure since they are responsible for transferring power from the generating plants to substations throughout Alabama Power's service area. I n addition, the company was facing 940 transformers t h a t were damaged, 1,376 poles t h a t needed to be replaced, a n d 384 miles of distribution power lines t h a t were out of service. These distribution lines provide the basic infrastructure t h a t allows for service to homes and businesses. With such extensive and monumental damage to its 54


infrastructure, Alabama Power was faced with a t r e m e n d o u s challenge. How could a n organization recover fast enough to provide the desperately needed service of power to customers over such a large, devastated geographic area? The answer actually begins well before the question can be asked.

RISK MANAGEMENT Interest in risk management research is expanding. P a r t of this increased interest is the realization t h a t accurate risk assessment and response can improve supply chain effectiveness. This includes assessments t h a t identify and measure the fiscal impact of risk events, probability of occurrence, and potential a l t e r n a t i v e a c t i o n s . B e c a u s e of t h e interconnected aspects of today's supply chains, exposure to risk is greater than ever before. This makes the ability to foresee the unexpected extremely useful for supply chain managers (Barry, 2004). Recent natural disasters such a s Hurricane Katrina and the typhoon in the Indian Ocean have highlighted the need for better disaster preparedness planning (Hale and Moberg, 2005). Increased terrorist actions and numerous other potential events impacting civilian business and transportation centers h a s led to firms planning for when, not if, a disruption will occur. h m e d at reducing their vulnerability, organizations are developing strategic resilience initiatives to. increase their ability to recover from major disruptions (Rice and Caniato, 2003). Additional efforts focus on identification and assessment (Chopra a n d Sodhi, 2004) of a potential event. Regardless of the approach, all of the efforts are focused on classifying the risk and its source to evaluate exposure to the firm.

Minimizing Customer and Business Risk According to Alabama Power Senior Vice President of Power Delivery, Robin Hurst, "the key to managing a crisis is not waiting until the crisis occurs to begin planning." Alabama Power has practiced this philosophy of actively 1

planning well before a crisis begins. The results have been dramatic. For example, while there were longer-term repairs that needed to be made to the infrastructure after Katrina, the company accomplished a n amazing feat-restoring power to all of its customers in a n impressive eight days. In spite of severe electrical and general infrastructure damage and destruction from Hurricane Katrina, over 600,000 customers had power r e e s t a b l i s h e d w i t h i n a week! Furthermore, many of those customers only experienced outages for a few hours to a couple of days. Alabama Power has been dealing with these types of situations for many years. In 1979, Hurricane Fredric caused 239,400 Alabama Power customers to lose power and, given the severity of the storm, it took the company a respectable 21 days to fully restore power. Roughly twenty-five years later and based on the results achieved immediately after Katrina, it appears their dedication to continuous process improvement has continued to pay dividends to the company and its customers. It is clear that continually identifying disruption areas, training and equipping personnel, and updating the disaster response plan certainly makes a difference in business and in the lives of people.

CONTINGENCY PLANNING One preemptive method of managing for the potential impacts of disruptions is the contingency plan. This special type of planning provides a response blueprint for risks associated with a n unknown or unexpected event (La Londe, 2005). LaLonde adds that a contingency planning document should detail a timely and complete response to a specific risk when it is known or a cluster of risks when the organization cannot specifically identify all risks. Clay (197 1) further states that contingency plans should be made in anticipation of sudden situations which represent either a threat or an opportunity for a n organization. He noted that contingency planning may involve a wide range of potential occurrences including currency devaluation, take over bids, raw material

s h o r t a g e s , a n d competitor activities. Furthermore, Juttner (2005) reported that many organizations expect to see an increase in vulnerability because of growth in supply chain globalization, reduction in inventory holding, centralized distribution, supplier base reductions, outsourcing, and centralized production. Today's lean supply chains are becoming increasingly fragile and less able to deal with shocks and disruptions that ultimately can have a dramatic impact on an organization (Zsidisin, Ragatz et al., 2005). This increase in risk increases organizational awareness of the need to develop some type of coping mechanism in order to deal with potential disruptions. Successful contingency planning requires dedication to continuous development and refinement of the contingency plan at both the organizational and employee levels. Properly developed, the plan should be designed to address the crisis and should always provide details for timely and complete responses to both specific and general risks. A well-prepared plan must also take into account the lessons and experiences learned in previous events. Unfortunately, like many management plans, this is much more easily identified and verbalized than it is executed. Nevertheless, if properly executed, the proactive process of business continuity planning, contingency planning, or disaster planning provides the foundation for reaction once a n event occurs. This special type of planning provides a blueprint for responding to the risks associated with a known or unknown event.

Implications of Contingency Planning How is it possible to provide a blueprint for responding to an event that is unknown? Clearly, it is impossible to accurately predict every future unknown event. Managing a crisis often includes handling disruptions to normal operations caused by unplanned events. Through the benefit of experience, research intelligence, hard work, continuous refinement and updating of the plan with current information, and a little luck, these efforts can lead a company to success in Fall 2007

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continuing their operations in the face of adversity. In the case of Hurricane Katrina, a geographically widespread natural disaster, Alabama Power found success by employing their crisis recovery plan. The aim of the contingency plan is to minimize potential loss by identifying, prioritizing, and safeguarding assets that need protection with the goal of the organization being to save valuable resources in the event of a disruption or disaster. Borrowing from the work of Rice and Caniato (2003), contingency planning means developing a plan to be resilient, or prepared to respond to and restore operations after an unexpected disruption occurs. Barnes (2001) adds that this form of planning is the integration of formalized procedures and resource information that organizations can use to recover from a disaster that causes a disruption to business operations. Contingency planning has been identified as a crucial issue for many organizations. In the 2003 and 2005 Bain Management Tool Surveys, 70 percent and 54 percent respectively of companies surveyed cited widespread use of contingency planning within their organizations (Rigby, 2003; Rigby and Bilodeau, 2005). Research involving contingency planning has become widespread across multiple disciplines (Barnes, 2001) including banking (Johnson, 2006), engineering (Bent, 2001), manufacturing (Iyer and Sarkis, 1998), and supply chain management (Svensson, 2004). The types of contingencies identified have grown to include more non-traditional disruption causes like natural disasters, terrorist actions, and information technology issues (Bent, 2001; Fawcett and Cooper, 1998). The global marketplace, with all of its inherent risk and increased potential for disruption has driven supply chain organizations to look for new ways to innovate (Flint et al., 2005). Strategy and strategic planning processes focus organizational resources in a manner that enhances firm performance through a competitive driver, such a s flexibility (Fawcett, Calantone, and Smith, 1996), especially in times 56


of a contingency. Strategy's importance is seen in two primary areas. First, strategy is seen in the identification of organizational core objectives and thereby, it's current and future direction. Second, s t r a t e g y guides development, organization, and allocation processes to be used to achieve objectives (Fawcett et al., 1996). Lorange and Vancil (1977) state that strategic planning systems have two major functions; to develop an integrated long-term planning mechanism and to facilitate long term adaptation to the operating environment. These functions help to shape the purpose of the contingency plan and provide a basis for multifunction efforts. The risk of a disruption is very real and can cause severe consequences. Therefore, creating awareness of risks to the business is a vital first step to successful continuity planning. Included in this first step for Alabama Power was identifying the purpose for the crisis plan. Alabama Power made it clear that the primary purpose for its disaster plan was to reduce customer outage time to an absolute minimum within the guidelines of safe, practical and orderly practices. The purpose provided planners with a solid foundation for all future planning, management, and operational efforts in the event of a crisis. The purpose serves as the basis for strategy development in a crisis as well as affecting plan implementation processes.

Applying Contingency Planning Due to the nature of their business, and the geographical location, Alabama Power has developed extensive experience in dealing with disasters of all sorts, ranging from hurricanes to ice storms. One important lesson they have learned is that in order to meet the stated purpose of their disaster plan, they must move, or be prepared to move, the necessary personnel, equipment, and logistical support to the affected areas as soon as it is safe. In order to do so takes a well organized, prepared team of professionals who are familiar with the requirements and resources available.

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A critical step i n developing any plan is determining the assignment of responsibility and outlining how the organization will be organized to best manage the situation. To borrow from military logistics expertise and terminology, the plan must outline the "chain of command and delineate who does what, when, and where. While never perfect, the basic organizational plan provides a n excellent starting point and aims to reduce vast amounts of confusion early i n the management of a crisis.

A well designed plan also allows personnel to be trained to meet specified, well-defined requirements that are assigned to each position on the crisis management staff. The plan and key managerial personnel are then responsible for informing the company of exactly what the personnel requirements will be in the event t h a t the organization's disaster plan is activated. Once the organizational structure is defined and personnel/skill requirements are determined, basic functions can be published, dictating the responsibilities of each individual position. By doing so, the plan helps to alleviate confusion during the event and supports training of

With the organizational structure of the disaster team in place, the positions identified, and personnel selected to fill the positions, it's time to review and prepare for mobilization. The plan provides guidance and responsibilities, but it is ultimately up to the people involved to be familiar with what and how they will fill their roles when called upon. Simply put, it is not enough merely to be aware of potential problems and to plan. Managers and personnel have to be familiar with the plan and take action when necessary. Once the plan is written and the people are trained and familiar with it, what is the next step in a successful disaster response? The organization must have the tools in place to support the personnel charged with key responsibilities. This ranges from designating a facility, or facilities, that will serve a s the

o p e r a t i o n s center(s) t o incorporating communication systems, to providing technology t h a t will assist in providing advanced warning when possible. Alabama Power utilized its dayto-day control centers as part of its contingency plan. The Alabama Control Center (central point of contact for power transmission), the Distribution Operation Center (Regional Control Centers in Birmingham, Montgomery, and Mobile charged with responsibility for monitoring power distribution), and the Customer Service Center (central customer service centers in Birmingham and Montgomery) were all vital to the success of Alabama Power's disaster response plan. In a situation like Hurricane Katrina where a major disruption is expected to impact multiple regions, the corporate office provides the central role in the disaster recovery plan. In these cases, the Corporate Storm Center in Birmingham, Alabama is also manned a s part of the disaster response plan. This facility provides a central point of contact when regional facilities require additional restoration support or when restoration assistance outside Alabama Power's service territory is requested. Obvious threats to business operations can be proactively addressed. Preventive action, where feasible, enables the company to identify and neutralize potential problems before they become problems. The intent is to understand potential weaknesses and to take proactive actions. This step not only prevents some potential disruptions, it also helps the organization deal with other situations a s they arise. Now the stage is set, the plan is up to date, the personnel are trained, and the facilities have been identified and equipped. In late August 2005, the decision was made to activate the Alabama Power Emergency Operating Procedures. Preliminary analysis was conducted to determine the most likely impact areas and the professionals within each division of Alabama Power began work on making the plan operational.

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In preparation for the storm, five specific focus items were developed. This short list of focus areas or key priorities was developed with the primary goal of minimizing customer outage times in mind. The five key areas were identified based i n large part on lessons learned from previous storms. As part of their commitment to excellence, management a t Alabama Power has implemented a continuous improvement process to aid in enhancing the effectiveness of their disaster planning. The result of the continuous improvement process was the identification of five key areas to address through the implementation of the disaster recovery plan. First, staging areas for incoming personnel and supplies were identified. This process enables the flow of material in a n organized fashion. The establishment of staging areas also makes the job of storing and moving required supplies and equipment more efficient. Next, decisions have to be made on the division of labor and prioritization of areas of control. There are only so many resources available to the company and important decisions have to be made concerning where those resources will be focused first for maximum value and impact. Third, resources necessary to support each staging area were identified. This allowed for early supply movement and pre-staging decisions to be made and adjusted a s the storm approached. Fourth, Alabama Power can contract with a third-party logistics company just i n case additional resources are required to fully implement the disaster recovery plan. The contractor provides temporary eating, sleeping, and restroom facilities a t designated staging areas when necessary. Finally, the plans for the use of company facilities a s back-up operating locations and refuge shelters is reviewed and finalized. The key decision to commit resources to logistics1 supply chain related areas and to relocating critical resources becomes crucially important in the days immediately following the storm. Even if the company has taken the necessary steps to increase disruption awareness and has taken action to anticipate and prevent problems before they can occur, supply disruptions cannot 58


be completely eliminated, especially in crisis situations. With this assumption, the company relies on its plan for quick action to fix problems when they occur. The plan provides a blueprint for appropriate actions and allows trained, knowledgeable personnel to take immediate, well informed action. In the case of restoring power after Katrina, Alabama Power faced a tremendous task. More than 600,000 customers were without power; 1,376 poles needed replacing, 940 power transformers were damaged, and close to 2,000 miles of power lines had to be restored. Efforts to restore power had to begin a s soon as possible. Due to continuous planning conducted by the company, trained personnel went into action immediately. They utilized the disaster response plan, the resources of the organization, and the technology available to tackle the many problems facing the company.

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Communication is vital to successful coordination of the disaster response plan and the Katrina response was no exception. Communication is required to effectively establish the priority of repair, schedule proper distribution of supplies and resources, and help to ensure safety of workers and customers. P r e v i o u s l y c o o r d i n a t e d s u p p o r t from SouthernLINC Wireless provided communications between field employees and various operation centers a s well a s many public safety departments. This enabled Alabama Power to begin its survey and repair efforts immediately after the storm had passed. Several logistical issues also had to be addressed if the primary goal of the disaster recovery plan was to be met. During the peak period of restoration efforts i n Alabama and Mississippi, the Alabama Power Company managed or assisted in managing 20 staging areas in Alabama and Mississippi. Overall, the company processed 200 truckloads of material and coordinated 100 buses and numerous personnel support vehicles i n a very short period. In addition, the company operated 40 refueling sites managed by 80 employees dispensing

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306,529 gallons of .fuel. In direct support of personnel, the company coordinated service and provision for 74,088 breakfasts, 82,198 lunches, 75,617 dinners, and 3.36 million pounds of ice. In this type of contingency situation, many items that are taken for granted become a n issue. Therefore, Alabama Power also coordinated service for over 25,000 pounds of laundry, 60 dumpsters, 12 office trailers, and 350 portable toilets. The combination of a business continuity plan, well defined tactical processes, sufficient levels of preplanned logistical support, and the effective utilization of qualified personnel led to total restoration of power in only eight days, a truly remarkable feat.

KNOWLEDGE U N A G E M E N T CONTINUOUS PROCESS IMPROVEMENT The last big piece of the planning puzzle is knowledge management. When disruptions occur, it is very important t h a t organizations learn from the experience-from both positive a n d negative aspects. While this can sometimes be easily achieved a t the individual level, learning a t a n organizational level takes a special effort. This i s i n large part why Alabama Power employs a n active continuous process improvement program a s part of its management philosophy. This i s particularly important when examining the disaster response plan employed

Knowledge management is vitally important to firm success, 1eadingAlavi a n d Leidner (1999) to argue t h a t the knowledge-based theory of the firm suggests t h a t knowledge i s t h e organizational asset that enables competitive advantage in hypercompetitive environments. The speed a t which multiple changes to the business environment occur has created a relatively new incentive to gather, store, and create knowledge assets a s a means of creating sustainable value over time (Becerra-Fernandez and Sabherwal, 2001). Knowledge has been defined a s "the justified personal belief t h a t

increases a n individual's capacity to take effective action" (Huber, 1991; Nonaka, 1994). Jarevenpaa and Staples (2000) relate that the management of knowledge is based on a n organizational capability to create and disseminate knowledge. Organizations serve a s knowledge-integrators, combining the knowledge of many different individuals and groups in the production of goods and services (Kogut and Zander, 1992, 1996). This process of creating, capturing, storing, and integrating knowledge is known a s knowledge management. This multi-faceted process has come to be used to describe a span of activities from organizational learning to information systems and has been defined and used in many different ways (Quaddus and Xu, 2005). According to Ruggles (1998), knowledge management is "an approach to adding or creating value by more actively leveraging the know-how, experience, and judgment resident internal and external to an organization." Knowledge Management Systems provide the infrastructure for organizations to implement their creation, transfer, and application of knowledge (Alavi and Leidner, 2001). These systems provide the ability to search for and find knowledge, or knowledge components, in multiple forms in a n efficient manner (Gray, 2000). While often associated with information technology, knowledge management systems may take multiple forms (Quaddus and Xu, 2005). Chait (1999) points out that these types of knowledge management systems must identify or provide: (1) personnel with needed skills and knowledge (provide a directory), (2) information about customers a n d clients that in turn helps organizations support and serve them, (3) information about methodologies and tools that allows organizations to deliver quality and consistent service, and (4) information about practices and groups t h a t keep everyone in organizations up to date. Given these attributes and the previously discussed description of a contingency plan, a plan is actually a form of a knowledge management system.

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Typically, during and immediately after a crisis, personnel are working long hours in preparation and mobilization for the event. During this period, they have serious concerns about their own families, friends, a n d property. Nevertheless, they serve their company and its customers in a professional manner, responding to the crisis. Now, immediately after working countless hours in adverse conditions, sleep deprived professional employees are expected to record detailed success stories and identify problem areas so the disaster response plan can be enhanced prior to the next event. In order to properly prepare for, and not relive the same situation over and over again, it is vitally important to document both successes and problems a s soon as possible after they occur. The fresher the issue and company reactions are in the minds of the employees, the more accurate and thorough the employee recollection of the situation is presumed to be. This allows the organization to improve the plan and effectively manage the continuous improvement process through continuous enhancement of the disaster recovery plan. Even if everything goes relatively well, the 'postmortem' examination is a means of continually enhancing the plan. Ultimately, the continuous planning mindset is essential to long-term success.

Applying Continuous Process Improvement Alabama Power continued their planning process improvement efforts throughout and subsequent to Hurricane Katrina. As part of the contingency plan and its requirements for personnel, detailed event logs were kept, both to support restoration

effort decision-making processes and to assist in continuous process planning improvement for future crisis events. Reporting experiences from a n event are critical, whether the lessons are truly new experiences or repeats of the expected, it is important to record, prioritize, report, and address each experience.

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Lessons learned from Hurricane Katrina included such issues a s the need for increased logistics support for personnel and potential vulnerability of communication capabilities. Enhancing the identification of alternate facilities, managing competition for scarce resources, and support of employees with property losses and family crises were also identified a s key areas that could be addressed to aid disaster response improvement. Since no two crisis situations are the same, new lessons can be learned from each event. Hurricane Katrina will have many long-term impacts. Many businesses are only now recovering from losses while other businesses will never recover. Natural disasters of this type cause massive business disruptions, regardless of industry. In the case of Alabama Power, the company was able to successfully manage restoration efforts in minimal time. This is due, in large part, to the continuous dedication of the company to contingency planning efforts conducted through implementation of a continuous process improvement philosophy. By focusing their efforts on awareness, prevention, remediation, and knowledge management, Alabama Power was able to recover quickly and efficiently from the mass devastation created by Hurricane Katrina.

REFERENCES

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Alavi, M., and Leidner, D. E. (1999). "Knowledge Management Systems: Issues, Challenges, and Benefits," Communications of the Association for Information Systems, l(7).

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Alavi, M., and Leidner, D. E. (2001). "Review: Knowledge Management and Knowldege M a n a g e m e n t S y s t e m s : Conceptual Foundations and Research," MIS Quarterly, 25(1), 107-136.

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Fawcett, S. E., Calantone, R. J., and Smith, S. (1996). "An Investigation of the Impact of Flexibility on Global Reach and Firm Performance," Journal of Business Logistics, 17(2), 167. Fawcett, S. E., and Cooper, M. B. (1998). "Logistics Performance Measurement and Customer Success," Industrial Marketing Management, 27(4), 341-357. Flint, D. J., Larsson, E., Gammelgaard, B., and Mentzer, J . T. (2005). "Logistics Innovation: A Customer Value-Oriented Social Process," Journal of Business Logistics, 26(1), 113-147. Gray, P. H. (2000). "The Effects of Knowledge Management Systems on Emergent Teams: Towards a Research Model," The Journal of Strategic Information Systems, 9(2-3), 175191. Hale, T., and Moberg, C. R. (2005). "Improving Supply Chain Disaster Preparedness: A Decision Process for Secure Site Location," I n t e r n a t i o n a l J o u r n a l of Physical Distribution a n d Logistics Management, 35(3), 195-207. Huber, G. P. (1991). "Organizational Learning: The Contributing Processes and the Literatures," Organization Science, 2(1), 88. Iyer, G. R. (1996). "Strategic Decision Making in Industrial Procurement: Implications for Buying Decision Approaches," Journal of Business a n d Industrial Marketing, 11(314), 80. Iyer, R. K., and Sarkis, J . (1998). "Disaster Recovery Planning in a n Automated M a n u f a c t u r i n g Environment," IEEE Transactions on Engineering Management, 45(2), 163.

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AUTHOR BIOGRAPHY Joseph B. Skipper is a doctoral student in management in the Department of Management a t the College of Business, Auburn University and a Major in the United States Air Force. Ben has served a s a logistics officer in the USAF for 13 years holding positions a t the tactical, operational, and strategic level. He holds a B.S. degree in marketing from Troy State University, a s well as a M.S. in logistics management from the Air Force Institute of Technology. His primary research interests include contingency planning, risk management, and supply chain disruption. Ben has presented papers a t the 37thAnnual Meeting of the Southeast Decision Science Institute and won second place in the Student Paper Competition. He was also selected to attend the Council of Supply Chain Management Professional Doctoral Symposium and was named the Auburn University College of Business Outstanding First Year Ph.D. Student, both in 2006. He has reviewed submissions to the Journal of E n d User Computing, 37thAnnual Meeting of the Southeast Decision Science Institute (SEDSI), Americas Conference on Information Systems (AMCIS), and the Hawaii International Conference on Systems Sciences (HICSS).

AUTHOR BIOGRAPHY Joe B. Hanna (PhD. New Mexico State University) currently serves a s departmental chair and professor of supply chain management in the College of Business a t Auburn University. Dr. Hanna has authored or co-authored numerous journal articles appearing in journals such as the Journal of Business Logistics, International Journal of Logistics Management, and the Journal of Transportation Management. Dr. Hanna has also coauthored a logistics textbook and has participated in government funded transportation research. Joe is also a n active member of several professional organizations and regularly conducts professional training seminars for various organizations. Dr. Hanna's area of interest i n supply chain management allows him to instruct undergraduate, graduate, and executive education students a t Auburn University. Prior to entering academia, Joe gained professional experience working for Phillips Petroleum Company, Phillips 66 Chemical Company, and Coopers and Lybrand.

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AUTHOR BIOGRAPHY Dr. Gibson (PhD. University of Tennessee) serves a s Professor of Supply Chain Management a t Auburn University. Dr. Gibson teaches logistics and supply chain management courses in Auburn's undergraduate, graduate, and distance learning programs and has won numerous awards for his teaching expertise. Dr. Gibson is active in executive education, corporate training, and consulting and participates in professional organizations and outreach activities. Dr. Gibson is engaged in logistics research with many of his most recent articles having appeared in International Journal of Logistics,

Journal of Business Logistics, International Journal of Physical Distribution and Logistics Management, and Supply Chain Management Review.

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