Jun 06 How Strong is Your Business Interruption Plan?

It is important to evaluate and update your systems and procedures in the event of business disruptions or failures.

 

Your supply chain includes people, IT systems, communications, transportation, and many other moving parts.  A failure in one of these areas could significantly impact your business and cause a domino effect within operations.  Are you prepared for what could be a significant disruption to your business?

 

Organizations are recognizing the need for a well-prepared risk mitigation strategy and are pivoting from an emphasis on how to respond to an unexpected event to now thoroughly preparing for the unforeseen.

 

Some internal and external factors that can affect your business are:

 

• Manufacturing disruptions or failures
• Public transportation issues
• Logistics disruptions or failures in supply chain
• IT disruptions or failures
• Fluctuations in the cost of fuel and energy
• Natural disasters (floods, fires, hurricanes, etc.) and related utility outages

 

Here are some steps to building a resilient supply chain:

 

• Conduct an assessment. Gather extensive data from all elements of your organization and its interdependencies to identify internal and external threats to its resiliency, as well as its vulnerability points (processes, people, technology, third-party suppliers, etc.).

 

• Obtain input from individuals across departments. Your team’s buy-in and ongoing support is critical for an interruption plan to succeed. Plans should be tested and employees, stakeholders, and necessary third-party organizations should be aware of the strategies in place before an emergency happens.

 

• Visualize the unforeseen. Get a handle on the “what-ifs” and potential sources of risk that could hinder your organization’s productivity. Consider alternative demand-supply scenarios as well as their impact on revenues and margins:

 

• What would happen to if your inventory was destroyed?
• What would happen if your suppliers could not meet their service deliverables?
• What if you were unable to move inventory to consumers?
• What if you were unable to process transactions?

 

• Develop your backup plan. Based on your weaknesses and scenarios of risk, create a strategy and develop policies to mitigate supply chain disruptions, respond and repair breaks, and return to normal business operations with minimal downtime.  This may include investing in advanced technology solutions, multiple manufacturing plants, multiple means of transportation, internal policies that outline the chain of command and communication in the event of a disaster, etc. These plans should be reviewed on a regular basis and adjusted when needed.

 

Building your risk mitigation strategy ensures the stability of your business and allows you to take control of future uncertainties.  It also creates a competitive advantage over your competition and those who have not planned for addressing a disaster and managing damage.

 

Feel free to reach out to Sax’s Manufacturing and Distribution Practice for guidance on analyzing critical business data and functions, planning for the unexpected, and implementing those plans appropriately.