By Gene Russell, Manex President & CEO
The sky is falling! What do we do?
Chicken Little overreacts to perceived danger, so much so that she misses the clear signs of real danger in the person of Foxy Loxy. For the same reason, the Chicken Little story can give a message about making accurate estimates of danger. That is exactly what continuity planning is about but with the plan to deal with these real dangers as a manager, a team, and a company.
Manufacturers benefit from business continuity planning because it helps identify and address single points of failure that are difficult to recover operationally. Many manufacturers place heavy reliance on customized difficult-to-replace plant and equipment and having a preconceived documented recovery plan addressing the loss of these would ensure balanced expectations and continuity through major incidents.
Depending on the type of product you manufacture, your customers may be tolerant to disruption, or are heavily tied into your product and willing/obliged to wait for recovery. However, they may switch their supply to a competitor almost immediately. If this is the case, you may face challenges returning to pre-incident levels of revenue.
For planning purposes, your priorities are to understand your critical customers’ situations, the products they rely on from you, and for how long they would tolerate a delay in your supply before they penalize you in some way or move to a competitor. This insight into their tolerance to loss of supply, and your own tolerance to the resulting loss of reputation, income, and so on, drive the required pace of your recovery. It means that all of the recovery strategies you devise must deliver an acceptable recovery of supply within these timeframes.
Define how much impact your organization can tolerate following an incident before you consider it to be unacceptable. This provides you with your own unique definition of what continuity risk means to your organization and prevents you from including minor operational risks in the plan which don’t require a continuity response.
Unacceptable impacts are those that would prevent your organization from achieving its long-term objectives. An impact of this scale requires you to change the operation of your organization to survive. Financial, reputation, production, human, and regulatory are good macro categories to start the process.
It is helpful to develop a series of charts, perhaps on spreadsheets to guide your thinking on each area of impact with definitions specific to your company. As you lay these out you can sort risks within each of the categories above.
Next, business-critical products and services are listed. A critical product is any that is essential in satisfying a critical stakeholder requirement.
- Identify coinciding periods of increasing and peak exposure.
- Identify at-risk products and risk sources that could lead to unacceptable loss.
- Identify preventive and defensive (resilience) measures to reduce the risks you identify.
- Identify scenarios you may want to explore or plan for.
- Provide a timeline for the strategies you devise to recover from each scenario.
Based on this analysis you will identify various continuity risks such as fire, flood, earthquake, cyber ransomware, transport failure, widespread quality failure, regulatory, human, and more. The process will flow to identifying the business response, time frame for recovery, managers responsible for emergency management, communication, and recovery. Include outside resources and suppliers. You can use spreadsheets, and flow charts to both plan, study, and communicate with the organization. While this task takes time upfront, even if you miss on a few assumptions, you will have a plan in place and your team will know what to do. Remember the art of repetition in management and review quarterly.
About the Author
As Manex President and CEO, Gene Russell is a driving force behind the firm’s successful track record in helping California manufacturing companies grow and thrive. He has held three successful CEO positions over a 20-year period for businesses that included early-stage, private equity, and non-profit. He has served as senior leadership for global Fortune 100 and iconic consumer-branded companies. Prior to Manex, Russell led a turnaround at a California midsized manufacturer. His experience in global sourcing and manufacturing over several decades led him to Manex where he brings real-world experiences, and as a result, a personal passion to restore and invigorate domestic USA-based manufacturing. He can be reached at firstname.lastname@example.org.