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Warehouse fire causes supply chain headaches for Gap Inc.

Warehouse fireplace reasons provide chain complications for Hole Inc.

Gap Inc. is in a bind that’s putting the agility of its supply chain through a trial by fire – literally. A fire in one of Gap’s East Coast warehouses is negatively impacting Gap’s ability to deliver purchases made online. The story of Gap’s troubles and how the company is responding could provide valuable insights to other businesses, should they experience a catastrophe of their own. Life happens, but smart retailers know to expect—and prepare for—the unexpected.

Huge fire with a huge impact

A large fire tore through a major distribution warehouse for Gap in Fishkill, New York. The fire was first reported Monday night, but it took nearly 48 hours and 20 fire departments from three counties to get the immense flames under control. About 25 percent of the building is damaged beyond repair, and the rest has significant smoke and water damage. Much of the product was destroyed in the fire.

Now, instead of focusing on the upcoming holiday, Gap has to struggle to mange the here and now. The Fishkill facility represents about 10 percent of the company’s entire nationwide warehouse capacity, and it will have to remain closed for weeks, possibly months. That’s in the middle of the back-to-school shopping season and in the ramp up to the holiday shopping season, no less.

The fire means shoppers in the busy Northeast region are going to wait longer than usual to receive items purchased online. Gap is shepherding orders to be fulfilled from facilities in Ohio and Tennessee, but they aren’t necessarily built for the higher volume of orders, or the additional shipping time to reach further destinations. Additionally, Gap is trying to find new channels of distribution and seeking out emergency warehouse space.

Vulnerabilities of all retailers and suppliers

We try not to think about it, but this type of thing can happen to any business. Though the cause of this particular fire hasn’t been determined, electrical issues, lightning strikes and even arson could bring down a warehouse, crippling the retailers and/or suppliers that depend on it being available.

Fire isn’t the only risk to a supply chain. There’s also the potential for other natural disasters, like the flooding in Baton Rouge, earthquakes in Italy and the hurricanes battering our coastal states. Unnatural disasters can also have an impact, such as the bankruptcy of South Korean shipping company Hanjin, currently roiling the supply chain.

Retail networks can fill the gap

Pardon the pun, but it’s true. When there’s an interruption in supply chain, whether it’s a day or several months, being part of a retail network can save a company’s bottom line. When you are part of a retail network, your abilities to collaborate with trading partners can give you visibility and access to needed inventory in the short-term, or help find additional sourcing partnerships to help you through a crisis.

The process of switching gears without a retail network can take months. Finding suppliers and negotiating a contract can be easy, but integrating them into your system can take months of back and forth communication.

With a retail network, you’re connected to a web of potential. You can add new trading partners and connections in hours instead of days, weeks or months. Other members of the retail network may also seek you out, opening up new opportunities that may not have been on your radar, all while pleasing your customers.

Want to learn more about how a retail network can be helpful for your business in both good times and bad? Contact EDI Here today.

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