Executive Briefings

P&G, After Devastation of Hurricane Katrina, Shows the Value of Best-Laid Plans

A coordinated, well-rehearsed strategy gets P&G back on line in New Orleans in record time. And the company learns some lessons for the future.

Every supply chain with a presence in the New Orleans area was hit hard by Hurricane Katrina in August 2005. But no company bounced back faster than Procter & Gamble.

Katrina laid waste to much of the infrastructure of southern Louisiana and the Mississippi Delta. P&G couldn't help but be affected by the devastation. The company accounts for 40 percent of all coffee sold in the U.S. for home consumption, and more than half its production is based in New Orleans.

P&G operates four major coffee-producing facilities in the area: a Folgers plant on Gentilly Road, its biggest site in the region; the smaller Millstone plant, adjacent to Gentilly; a large storage operation near the Mississippi River; and the Lacombe distribution center, where packaged coffee is held for shipment to retailers.

Both the Folgers and Millstone plants are in Orleans Parish, one of the areas hit hardest by the flooding that followed the storm. Although the Gentilly plant sits on high ground, and was built to withstand winds of up to 140 miles per hour, access routes were completely blocked by the floods, according to Cath Malseed, the company's director of coffee product supply.

Despite all obstacles, "P&G was the first business back in operation" following Katrina, Malseed says. Helping things along was a detailed business continuity plan, designed for each facility and rehearsed annually. When the real thing came, P&G was as prepared as it could be.

Any hurricane entering the Gulf of Mexico automatically triggers a series of emergency measures by P&G, including the transfer of inventory to distribution centers outside the New Orleans area, the sending of inventory backup tapes to headquarters in Cincinnati, Ohio, and the advent of hurricane shutdown procedures. Katrina was first classified as a hurricane on Thursday, Aug. 25, 2005, even though it was then not expected to hit New Orleans. By Saturday, the storm's ultimate path was clear, and P&G had shut down all of its local sites.

Katrina hit New Orleans on the morning of Sunday, Aug. 29, with winds of 140 to 145 mph. Its approach path was guaranteed to cause the worst possible flooding, Malseed says. The storm surge caused tidal waves up to 30 feet high. P&G's own facilities came within 15 miles of a direct hit from the hurricane.

The company established a command post at a plant in Alexandria, La., 225 miles north of New Orleans. Then it began accounting for its people. It was hampered by the complete failure of the local phone system, rendering useless a carefully rehearsed employee call-in procedure. Nevertheless, P&G set up a hot line at the Alexandria plant for employees who had access to phones.

By Sept. 19, all 550 of P&G's local employees had been safely accounted for. But the challenge had barely begun. To accommodate workers who had lost their homes, the company set up a trailer village at the Gentilly plant. The first 113 units came from the much-maligned U.S. Federal Emergency Management Agency (FEMA) on Sept. 11. The village quickly grew to 130 trailers and 500 people, who were provided with hot meals, recreation and laundry facilities. In all, P&G brought in more than 180 truckloads of food and personal care products for its employees and contractors.

Recovery efforts began on day one, Malseed says. The Gentilly plant had suffered more than $10m of damage, and for many days the only access to it was by helicopter. Cincinnati became the command center for dealing with suppliers and engineering contractors. Satellite communications were installed at all sites within a couple of weeks.

Adding to the urgency was the fact that P&G was approaching its fourth quarter, during which shipments are 33 percent higher than the rest of the year. "We were not about to let our shelves go bare during the 2005 holiday season," says Malseed. The only solution was to restore production-not just in New Orleans, but in other sites around the country as well.

Specially appointed teams were given the ability to sign contracts with new suppliers, including two in Mexico and two in the U.S. The supply line was established in less than a month, but P&G was still short of needed production capacity. So it took some used and refurbished equipment and installed them at a plant in Kansas City, Mo.

In New Orleans, road access was restored by Sept. 10, and the first production line started up within another seven days. Some 80 percent of the startup employees were from P&G operations outside coffee, since many of the workers in that division had been given time off to pull their lives together. With local water supplies cut off, P&G had to drill a well, which continues to provide water at lower rates than those charged by the local municipality, according to Malseed.

By mid-October, the plants were at full capacity. Today, says Malseed, P&G's volume share of the coffee market is 6 percent higher than in the pre-Katrina days. But things didn't go off without a hitch. The company underestimated the degree of trauma that would be experienced by its local employees, many of whom required on-site counseling. And it wasn't able to complete a shutdown of the main production plant before the storm hit, causing equipment to become clogged with coffee tar. Workers spent three weeks applying high-pressure steam to remove the substance, Malseed says.

Nevertheless, P&G's plans and actions were sufficient to restore operations within a relatively short period of time. The company continues to refine its emergency response plans, holding simulation exercises every year in May-just before the hurricane season gets under way.

 

P&G Thanks Its Partners

The Procter & Gamble Company extends its deepest thanks to employees, community partners and suppliers who provided tireless and invaluable support for our recovery efforts in New Orleans after Hurricane Katrina. P&G employees, many of whom were displaced by the storm, were united by a rallying cry to "support our people and save the business"-they were dedicated to ensuring our Folgers and Millstone brands were available on store shelves in time for the very important 2005 holiday season. P&G suppliers, including former suppliers with whom the company maintained positive relationships, were proactive in offering people, supplies and other resources to create alternative supply channels and accelerate recovery efforts.

Finally, community partners, such as local, state and federal government contacts and community welfare organizations, were extremely responsive to the needs of our employees and our business. In addition, we worked together with several community agencies to distribute much-needed P&G products, ranging from diapers to shampoo to pet food, to New Orleans's hardest hit communities. P&G remains committed to New Orleans, and we are continuing to work with officials there to support the region's ongoing recovery and rebuilding.

Every supply chain with a presence in the New Orleans area was hit hard by Hurricane Katrina in August 2005. But no company bounced back faster than Procter & Gamble.

Katrina laid waste to much of the infrastructure of southern Louisiana and the Mississippi Delta. P&G couldn't help but be affected by the devastation. The company accounts for 40 percent of all coffee sold in the U.S. for home consumption, and more than half its production is based in New Orleans.

P&G operates four major coffee-producing facilities in the area: a Folgers plant on Gentilly Road, its biggest site in the region; the smaller Millstone plant, adjacent to Gentilly; a large storage operation near the Mississippi River; and the Lacombe distribution center, where packaged coffee is held for shipment to retailers.

Both the Folgers and Millstone plants are in Orleans Parish, one of the areas hit hardest by the flooding that followed the storm. Although the Gentilly plant sits on high ground, and was built to withstand winds of up to 140 miles per hour, access routes were completely blocked by the floods, according to Cath Malseed, the company's director of coffee product supply.

Despite all obstacles, "P&G was the first business back in operation" following Katrina, Malseed says. Helping things along was a detailed business continuity plan, designed for each facility and rehearsed annually. When the real thing came, P&G was as prepared as it could be.

Any hurricane entering the Gulf of Mexico automatically triggers a series of emergency measures by P&G, including the transfer of inventory to distribution centers outside the New Orleans area, the sending of inventory backup tapes to headquarters in Cincinnati, Ohio, and the advent of hurricane shutdown procedures. Katrina was first classified as a hurricane on Thursday, Aug. 25, 2005, even though it was then not expected to hit New Orleans. By Saturday, the storm's ultimate path was clear, and P&G had shut down all of its local sites.

Katrina hit New Orleans on the morning of Sunday, Aug. 29, with winds of 140 to 145 mph. Its approach path was guaranteed to cause the worst possible flooding, Malseed says. The storm surge caused tidal waves up to 30 feet high. P&G's own facilities came within 15 miles of a direct hit from the hurricane.

The company established a command post at a plant in Alexandria, La., 225 miles north of New Orleans. Then it began accounting for its people. It was hampered by the complete failure of the local phone system, rendering useless a carefully rehearsed employee call-in procedure. Nevertheless, P&G set up a hot line at the Alexandria plant for employees who had access to phones.

By Sept. 19, all 550 of P&G's local employees had been safely accounted for. But the challenge had barely begun. To accommodate workers who had lost their homes, the company set up a trailer village at the Gentilly plant. The first 113 units came from the much-maligned U.S. Federal Emergency Management Agency (FEMA) on Sept. 11. The village quickly grew to 130 trailers and 500 people, who were provided with hot meals, recreation and laundry facilities. In all, P&G brought in more than 180 truckloads of food and personal care products for its employees and contractors.

Recovery efforts began on day one, Malseed says. The Gentilly plant had suffered more than $10m of damage, and for many days the only access to it was by helicopter. Cincinnati became the command center for dealing with suppliers and engineering contractors. Satellite communications were installed at all sites within a couple of weeks.

Adding to the urgency was the fact that P&G was approaching its fourth quarter, during which shipments are 33 percent higher than the rest of the year. "We were not about to let our shelves go bare during the 2005 holiday season," says Malseed. The only solution was to restore production-not just in New Orleans, but in other sites around the country as well.

Specially appointed teams were given the ability to sign contracts with new suppliers, including two in Mexico and two in the U.S. The supply line was established in less than a month, but P&G was still short of needed production capacity. So it took some used and refurbished equipment and installed them at a plant in Kansas City, Mo.

In New Orleans, road access was restored by Sept. 10, and the first production line started up within another seven days. Some 80 percent of the startup employees were from P&G operations outside coffee, since many of the workers in that division had been given time off to pull their lives together. With local water supplies cut off, P&G had to drill a well, which continues to provide water at lower rates than those charged by the local municipality, according to Malseed.

By mid-October, the plants were at full capacity. Today, says Malseed, P&G's volume share of the coffee market is 6 percent higher than in the pre-Katrina days. But things didn't go off without a hitch. The company underestimated the degree of trauma that would be experienced by its local employees, many of whom required on-site counseling. And it wasn't able to complete a shutdown of the main production plant before the storm hit, causing equipment to become clogged with coffee tar. Workers spent three weeks applying high-pressure steam to remove the substance, Malseed says.

Nevertheless, P&G's plans and actions were sufficient to restore operations within a relatively short period of time. The company continues to refine its emergency response plans, holding simulation exercises every year in May-just before the hurricane season gets under way.

 

P&G Thanks Its Partners

The Procter & Gamble Company extends its deepest thanks to employees, community partners and suppliers who provided tireless and invaluable support for our recovery efforts in New Orleans after Hurricane Katrina. P&G employees, many of whom were displaced by the storm, were united by a rallying cry to "support our people and save the business"-they were dedicated to ensuring our Folgers and Millstone brands were available on store shelves in time for the very important 2005 holiday season. P&G suppliers, including former suppliers with whom the company maintained positive relationships, were proactive in offering people, supplies and other resources to create alternative supply channels and accelerate recovery efforts.

Finally, community partners, such as local, state and federal government contacts and community welfare organizations, were extremely responsive to the needs of our employees and our business. In addition, we worked together with several community agencies to distribute much-needed P&G products, ranging from diapers to shampoo to pet food, to New Orleans's hardest hit communities. P&G remains committed to New Orleans, and we are continuing to work with officials there to support the region's ongoing recovery and rebuilding.