From 'just-in-time' to 'just-in-case': contingency plans don't always come cheap, but some view them as necessary in today's unstable environment.

THE TURBULENT EVENTS of the past two years have been a supply chain Armageddon for logistics managers.

Starting with the Sept. 11 terrorist attacks, the logistics industry has had to cope with a series of unexpected events: last fall's West Coast port shutdown, this year's SARS epidemic, last spring's strike against Evergreen Marine Corp. at East Coast ports and, most recently, the blackout that affected much of the northeastern United States and Canada.

"We're all thinking, 'What next?'" said Vince Gulisano, senior vice president of global sales, marketing and solutions engineering for APL Logistics.

While just-in-time remains the dominant mantra for executives seeking to minimize inventory costs, "just in-case" has increasingly entered into their thought processes as they seek to protect the integrity of their supply chains in the event of a terrorist incident at a major seaport or some other disaster.

Third-party logistics providers and corporate logistics directors may not use software as sophisticated as that used by the Pentagon in war-games planning, but they increasingly are thinking of ways to bulletproof their supply chains so they can continue to operate in the event of a serious disruption--and in as cost-effective a manner as possible.

Indeed, the biggest criteria for logistics managers in choosing locations for their distribution centers and designing them is the cost-benefit analysis. No one wants to make huge investments in facilities and/or equipment that may never be used. On the other hand, they don't want to be caught short if, for example, there's a power disruption.

Many warehouses are so critical to the missions of their operators and customers that they have back-up generators. That's especially the case for facilities serving customers with high-value products such as high-tech equipment and pharmaceuticals, as well as for 3PLs' headquarters and data centers so that they can at least maintain the flow of information to their customers, even if the physical distribution hits a snag.