Harvard Case - The Trembling Iron Island: The 2018 Sulawesi Earthquake and Tsunami
"The Trembling Iron Island: The 2018 Sulawesi Earthquake and Tsunami" Harvard business case study is written by Joachim Mikalsen, Wouter Nientker, Luk N. Van Wassenhove. It deals with the challenges in the field of Operations Management. The case study is 18 page(s) long and it was first published on : Mar 25, 2019
At Fern Fort University, we recommend a comprehensive strategy for PT. PLN to enhance its resilience and operational efficiency in the face of future natural disasters. This strategy involves a multi-pronged approach encompassing robust supply chain management, technology and analytics, risk management, and organizational change, all underpinned by a strong commitment to sustainability and digital transformation.
2. Background
The case study focuses on PT. PLN, Indonesia's state-owned electricity company, and its response to the devastating 2018 Sulawesi earthquake and tsunami. The disaster caused significant damage to PLN's infrastructure, leading to widespread power outages and disruptions in electricity supply. The case highlights the challenges faced by PLN in restoring power quickly and effectively, particularly in the context of limited resources, damaged infrastructure, and a challenging geographical landscape.
The main protagonists in the case are:
- PT. PLN: The Indonesian state-owned electricity company responsible for providing power to the nation.
- The Sulawesi Region: The region impacted by the earthquake and tsunami, highlighting the vulnerability of infrastructure to natural disasters.
- The Indonesian Government: The entity responsible for disaster relief and supporting PLN's recovery efforts.
3. Analysis of the Case Study
The case study reveals several key areas where PT. PLN can improve its disaster preparedness and response:
- Supply Chain Management: The earthquake exposed vulnerabilities in PLN's supply chain, particularly in terms of inventory management, logistics, and sourcing. The company struggled to access critical equipment and materials due to damaged infrastructure and disrupted transportation networks.
- Technology and Analytics: The use of technology and analytics could have significantly improved PLN's response. Real-time data on damage assessment, resource allocation, and power restoration progress would have been invaluable.
- Risk Management: PLN's risk management framework needs to be strengthened to better anticipate and mitigate the impacts of natural disasters. This includes developing comprehensive disaster preparedness plans, conducting regular risk assessments, and investing in resilient infrastructure.
- Organizational Change: The disaster highlighted the need for organizational change within PLN. This includes fostering a culture of preparedness, enhancing communication and coordination among teams, and improving decision-making processes.
4. Recommendations
To address the challenges identified, PT. PLN should implement the following recommendations:
1. Strengthen Supply Chain Resilience:
- Inventory Management: Implement a Just-in-Time (JIT) production system for critical equipment and materials, ensuring sufficient buffer stocks at strategic locations.
- Logistics: Develop robust logistics networks with multiple supply routes and alternative transportation methods to ensure uninterrupted access to resources.
- Sourcing: Diversify sourcing strategies by establishing partnerships with multiple suppliers, including local businesses, to reduce reliance on single sources.
- Capacity Planning: Implement capacity planning models to anticipate demand fluctuations and ensure adequate resources are available during emergencies.
2. Leverage Technology and Analytics:
- Information Systems: Invest in robust information systems that can provide real-time data on infrastructure damage, resource availability, and power restoration progress.
- Technology and Analytics: Utilize technology and analytics to optimize resource allocation, identify critical infrastructure needs, and predict power outages.
- Digital Transformation: Embrace digital transformation to enhance operational efficiency, improve communication, and facilitate data-driven decision-making.
3. Enhance Risk Management:
- Risk Assessment: Conduct regular risk assessments to identify potential threats and vulnerabilities, including natural disasters, cyberattacks, and climate change.
- Disaster Preparedness: Develop comprehensive disaster preparedness plans that outline clear roles and responsibilities, communication protocols, and evacuation procedures.
- Resilient Infrastructure: Invest in resilient infrastructure, such as earthquake-resistant power plants and underground cables, to minimize damage during future disasters.
- Insurance: Secure adequate insurance coverage to mitigate financial losses in the event of a disaster.
4. Foster Organizational Change:
- Organizational Culture: Cultivate a culture of preparedness and resilience within PLN, emphasizing the importance of training, drills, and continuous improvement.
- Communication and Coordination: Enhance communication and coordination among teams, ensuring clear lines of authority and efficient information flow during emergencies.
- Decision-Making: Improve decision-making processes by empowering frontline personnel and utilizing data-driven insights.
5. Embrace Sustainability:
- Environmental Sustainability: Implement green operations practices to reduce PLN's environmental footprint and contribute to a more sustainable energy future.
- Sustainable Operations: Integrate sustainability considerations into all operational decisions, including the sourcing of materials, energy efficiency, and waste management.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with PT. PLN's core competencies in power generation, transmission, and distribution, while also reinforcing its mission to provide reliable and sustainable electricity to Indonesia.
- External Customers and Internal Clients: The recommendations prioritize the needs of PLN's external customers, who rely on the company for power, while also ensuring the safety and well-being of internal clients, the employees.
- Competitors: The recommendations aim to position PLN as a leader in the energy sector, demonstrating its commitment to resilience and innovation.
- Attractiveness: The recommendations are expected to yield significant financial benefits through reduced downtime, improved operational efficiency, and enhanced customer satisfaction.
6. Conclusion
The 2018 Sulawesi earthquake and tsunami served as a wake-up call for PT. PLN. By implementing the recommended strategies, the company can transform itself into a more resilient and efficient organization, better equipped to handle future disasters and continue providing reliable electricity to Indonesia.
7. Discussion
Alternative approaches to enhancing PLN's resilience include:
- Outsourcing: Outsourcing certain aspects of the supply chain, such as logistics and inventory management, to specialized third-party providers.
- Public-Private Partnerships: Collaborating with private sector companies to develop and implement innovative solutions for disaster preparedness and response.
Key assumptions underlying the recommendations include:
- Government Support: Continued support from the Indonesian government in terms of funding, policy, and regulatory frameworks.
- Technological Advancements: Continued advancements in technology and analytics, enabling PLN to further enhance its capabilities.
- Community Engagement: Active participation and collaboration with local communities to improve disaster preparedness and response.
8. Next Steps
To implement the recommendations, PT. PLN should:
- Develop a Detailed Implementation Plan: Outline specific timelines, milestones, and resource allocation for each recommendation.
- Establish a Dedicated Task Force: Create a cross-functional team to oversee the implementation process and ensure coordination among different departments.
- Pilot Test New Solutions: Conduct pilot projects to test the effectiveness of new technologies and strategies before widespread adoption.
- Monitor and Evaluate Progress: Regularly monitor and evaluate the impact of the implemented strategies, making adjustments as needed.
By taking these steps, PT. PLN can transform itself into a more resilient and sustainable organization, capable of weathering future challenges and continuing to serve the needs of the Indonesian people.
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Case Description
In the aftermath of the Sulawesi earthquake and tsunami in 2018, lives are at stake, infrastructure is damaged, coordination is limited and information is scarce. It is in this environment that humanitarian organizations have to operate in order to assist affected people in disaster-struck areas. The case follows the complex challenges confronting an international non-governmental organization (INGO) organizing a disaster response from HQ to provide aid to the victims in Indonesia.
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