Hello, I’m Judy Henderson.
Today I want to talk to you about business continuity planning, supply chain protection, alternate locations and other tips on how to stay in business after a major disaster.
Business continuity planning is often seen as either unrelated to the business plan or, at best, a necessary evil. Even those businesses that do have a plan seldom review it for consistency with the current state of the business. A plan written three years ago is likely to be incompatible with the existing business.
The reality is that business continuity is a strategic investment that helps a business stay competitive, even in the face of a temporary disruption. Here are some quick facts provided by the Houston Area Research Center:
-
35 – 40 percent of businesses disrupted by a disaster without a continuity plan never reopen.
-
The 5-year average of U.S. disaster losses is 2.5 billion (pre Katrina).
-
Every dollar spent on disaster preparedness saves $7 in recovering disaster related economic losses.
Did you know that the rate of occurrence of natural disasters has increased by 40 percent in the last 15 years?
How do you plan to stay in business if a disaster strikes?
Of course you need to be informed - Know what kinds of emergencies might affect your company.
Carefully assess how your company functions, both internally and externally, through continuity planning.
Account for all hazards (both man-made and natural disasters). You should plan in advance to manage any emergency situation.
How quickly your company can get back to business after a terrorist attack, tornado, fire or flood often depends on emergency planning. Start planning now to improve the likelihood that your company will survive and recover.
Determine which staff, materials, procedures and equipment are absolutely necessary to keep the business operational.
-
Review your business process flow chart, if one exists.
-
Identify operations critical to survival and recovery.
-
Include emergency payroll, expedited financial decision-making and accounting systems to track and document costs in the event of a disaster, and
-
Establish procedures for succession of management. Include at least one person who is not at the company headquarters, if applicable.
Identify your suppliers, shippers, resources and other businesses you must interact with on a daily basis. This may include third parties you and your suppliers need, such as a shipping company.
When considering how to protect your supply lines, think about:
Diversity - Develop professional relationships with more than one company to use in case your primary contractor cannot service your needs. You may even want to look for one out of state supplier in case your local and regional suppliers are disrupted by a disaster.
Ask that supplier how they intend to serve you in the event there is a disruption of the local transportation system. Your business continuity planning may have you well-prepared, but if a critical supplier is not, then you are likely to be disrupted, despite your planning.
If you find yourself in the unfortunate situation of having to replace critical assets after a disaster, understand that you will find yourself in competition with everyone else who needs those same assets. Having an informal agreement, or a formalized agreement, with a supplier could benefit you.
If you have a little extra storage space, consider stockpiling those inventory items that are the most critical to your business operations. Usually 3-7 days worth is sufficient.
Consider entering into an agreement with a friendly competitor that you will share resources with you in the event of a disaster.
Create a contact list for existing critical business contractors and others you plan to use in an emergency. Keep this list with other important documents on file, in your emergency supply kit and at an off-site location.
No other area of business continuity planning benefits as much from effective pre-disaster planning as does supply chain protection. The absolute worst time to be surprised on supply-chain realities is in the middle of a crisis.
Plan what you will do if your building, plant or store is not accessible.
Consider if you can run the business from a different location or from your home.
Develop relationships with other companies to use their facilities in case a disaster makes your location unusable.
Identify production machinery, computers, custom parts and other essential equipment needed to keep your business open. Plan how to replace or repair vital equipment. Store extra supplies for use in an emergency.
I hope this information that I have shared today is helpful in making sure your business is ready if disaster strikes.
Thanks for listening.
For the IRS, I’m Judy Henderson.
|