Many business fail to pay attention to Business Continuity Planning, putting them at risk of severe struggle or even catastrophe when the following occurs:
•Natural Disasters like floods, earthquakes, pandemics, etc. that are outside their control.
•Disruption of operations from accidents, fire or employee strikes.
•Discontinuation of key raw materials or components needed to manufacture product.
Having a solid plan to address every possible iteration is no guarantee of success, but when a business does its utmost to create and sustain a plan it increases the probability of survival and a faster return to a thriving business.
Business Continuity Planning is a never ending process, that requires consistent review. It requires the highest level of commitment from the management team, and strong discipline to sustain the effort even in the most successful times. There are key considerations when creating your plans, along with a structure to address different phases of recovery whenever a crisis might occur that would invoke the Business Continuity Plan. It is extremely important that a Business Continuity Plan is not something happening in the background or external to the day to day, short term or long term goals of an organization. Business Continuity Planning, when conducted correctly is totally integrated with the company goals and strategy at every moment. It will enhance the performance of the organization.
Either move forward or be prepared to be pushed back.
~ Steve Marr
Please consider this following case:
A key successful global coatings manufacturer with greater than a 25 year history was concerned about the sustainability of its business, and ability to sustain growth. The key customer base for the company was using product in over 50 countries in nearly every region of the world by 2011. Much of the new expansion of business was in Asia. Most of the expensive products produced for Customers had a short shelf life, in some cases less than two months. In addition, these same expensive products must be kept cold or even frozen or they would spoil even faster, possibly within 24 hours. In 2011, the only major manufacturing site was in the USA, with a very small manufacturing capacity in Japan. Therefore, there was a severe strain on the outbound supply chain from one site to 50 countries, and the Japan site could not meet demand.
Initially, the project was to investigate the proper location for a new manufacturing location in Asia. Due to the high cost of the products and concerns over IP (Intellectual Property rights) the country of Singapore was selected. In addition, support for the project was available from the Parent Company (based in Japan) that had a large operation in Singapore.
Over the course of the next eight years a comprehensive plan was created and executed to enhance the capability and sustainability of the operation, laboratories, supply chain, technical teams and human resources. This was necessary to support the growth of the business and ensure continuity of the business.
Gaps related to Business Continuity Identified in 2011:
•99% of Manufacturing in one location in North America with 60% of Customers in Europe and Asia
•No organized Purchasing Department with all procurement conducted by the finance department
•No Supply Chain agreements with key vendors
•No identification or sustainability plan of key raw materials
•Lack of adequate material resources planning system (MRP)
•No MRP standard for multiple locations
•Minimal manufacturing automation (mixing and blending conducted by manual processes)
•No standard shipping/supply chain practices
•No adoption of Lean processes
•Inadequate Quality systems
•Unknown Safety/Environmental Standards
•Inadequate employee talent and training
•No Succession Planning
•Lack of cross functional teamwork (turf wars and silos)
•Long Term Vision of the Business
In a proper Business Continuity Plan there are three core considerations to address and this was the focus to address the gaps listed above:
Tangible Infrastructure – Physical Items used for production, manufacturing, and testing
Supply Chain – Raw Materials, transport, storage capacities, third party logistics, and vendor/supplier/competitor relationships
Intangible – (Human Infrastructure) – Management Team, Training, Supervisory Skills, Support Systems
1. Tangible Infrastructure:
•New manufacturing location founded in Singapore
•Automation and standardization of Manufacturing processes in both USA and Singapore inclusive of Supervisory Control and Data Acquisition – (SCADA)
•Enhanced in process quality processes
•Enhanced QC analytical processes and equipment
•5S Lean systems for all locations
•Standardized Technical support labs including clean room environments
•Replication of products at different locations to ensure continuity of supply
•Consolidation of lab/office with enhanced capability in China
•Larger Satellite warehouse distribution center and laboratory in the UK to support Europe
2. Supply Chain:
•Supply chain department created, staffed and managed under operations with direct contact to Global Suppliers
•Global raw material plan, inclusive of supply agreements and quarterly analysis of sustainable supply
•Global Third party logistics plans (3PL) to support both raw material and outbound shipments
•Enhanced and standardized shipping processes to ensure environmental requirements and customer requirements are met
•Standardized Material Resources Planning at all locations
•Enhanced site storage capacity and standard conditions (Temperature Control)
•Identification and Qualification of alternate raw materials to ensure continuity of supply
•Enhanced raw material efficiency lowering costs and increasing profit margins
•Global ISO Quality Systems with both manufacturing sites certified under 2015 standard
•Global Environmental Standards
•Standard Non-Conformance Corrective Action Standards (NCCA)
•Enhanced Training Systems
•Global HR systems
•Management and Supervisory Training
Likewise in the case of an actual crisis when the Business Continuity Plan will be tested each core consideration will be need to meet each phase of the recovery.
There are 5 Phases to address an actual crisis
1. Crisis Response (often the first two weeks) What is the most urgent for each core area – Tangible, Supply Chain, Intangible
2. Survival (How do we stay financially, physically, and mentally stable for the next six months)
3. Recovery (How do we pivot or business to gain positive momentum)
4. Growth (How do we sustain profitability and become more future focused)
5. Thrive (What is our new long term vision and reset of the Business Continuity Plan based on experience)
Over the eight year period 10% annual growth in Sales was supported with enhanced profitability and enhanced Customer relationships.
Review of the business continuity plan should be conducted on a routine basis, at minimum whenever there is any change to the business like a merger, acquisition, or significant growth.
Based on the analysis conducted there could be a determination made to enhance the capability of the business to survive the next crisis or to ensure sustainability of the business through Capital Investment.
•Execute plans wisely and ensure that the proper level of corporate support is provided to the new business.