Operational Continuity Plans
Continuity plans exist to implement systems of preventative measures and sustainable solutions to alleviate potential threats to a company at any given time. Aside from the anticipatory procedures, these plans are meant to withstand operational disruption through continued execution and unremitting workflow.
By understanding the mitigating factors contingent upon potential threats, you will have the visible advantage to not only maintain production in the event of a crisis, but to excel and progress as you normally would have. Knowing your supplier production, anticipating cost fluctuations, having access to temporary distribution centers, while also maintaining communication and on-going visibility will help your company navigate and weather the complexities in times of uncertainty.
Developing a comprehensive continuity plan is vital to the ongoing operational capacity of your company and essential to keeping your doors open for business. Continuity plans bridge the disrupted gap between possible threat and continued functionality of your operations team.
Quick response to disruption within your supply chain relies primarily on your collaborative efforts and awareness of your suppliers and the suppliers of your suppliers. Diversifying your risk is required to survive a pandemic of any size.
Communication: Continuous communication with your suppliers in order to fully understand their constraints is critical. They, too, are likely facing challenges with input materials, production capacity, workforce health, etc. Understanding where your business is in the supply process is reliant on your supplier status.
Nonessential: You may be an essential business granted operational duty during a global pandemic, but if your suppliers are deemed nonessential, your entire operations could be at risk of shutting down. This would mean you would need to pull inventory forward in anticipation of temporarily loosing access to your supplier.
Forecast Updates: Supply and demand will drastically fluctuate in times of an international crisis. Such as the forecast updates we are seeing in direct response to the COVID-19 global threat. It is imperative that this information continues to be passed on to your suppliers, so they can make any necessary adjustments as early in the production process as possible. This will help mitigate risk and unwarranted exposure.
Multiple Sources: Diversification is the golden rule to risk aversion. Having more than one supplier is always a key component of mitigating supply chain risk and the current COVID-19 outbreak is yet another example. Identifying new sources at this time might be a challenge but maybe the only option.
A successful continuity plan depends heavily on the structure and interconnectedness of your diversified source of suppliers. Maintain communication and allow for direct accessibility to decrease the severity of any impending challenges within your supply chain.
Managing Logistics with Disruption
Despite lower volumes, cuts in carrier capacity has strained the system. Both air and ocean carriers are running limited schedules and with limited equipment availability. This is resulting in slower transit times and delays.
How do you adjust?
· Find alternate routings for expedited inventory shipments
· Anticipate fluctuating costs
· Maintain visibility to real-time status and adjust the business and customer expectations accordingly
Daily supply chain modifications and continued optimization are essential to surviving an unexpected storm. The disrupted supply issues we are effectively seeing today as a result of COVID-19 is the epitome of supply chain risk management. These are the type of situations where a seamless continuity plan is imperative to the continuation of your business.
Okay, so, your business is declared essential and you remain open and ready to serve. What happens though if your customer’s business is nonessential and closes?
There are two sub-scenarios here that must be considered:
1. Was this an expected customer closing? If yes, production must be put on hold immediately and all shipments delayed.
2. Was this an unexpected customer closing? If yes, move to distributions centers and hold your product until re-opening occurs.
Just because orders have stifled due to global issues or a disaster of any kind, does not mean operational flow of inventory supply stops along side it. Quite the opposite. This type of situation tends to pit supply against demand and opens procurement channels of acquisition to the entire community of suppliers.
Having a continuity plan for customer closings is needed to maintain activity generation, but preparation for when these customers re-open is equally important.
What does this look like?
Open channels of communication and a heightened level of transparency.
More specifically, visibility into the customers production status. What do they have? What do they need? What will it take to source, manage, and then transport product for full operational restoration?
Contingency planning must continue to be integrated into all conversations around production and operations post re-opening phase. Taking impending or circumstantial events into account will continue to proportionately mitigate risk for the foreseeable future.
Many companies are forced to close their facilities when a confirmed COVID-19 case is identified. The process typically involves a 14 days closure and facility remediation.
There are companies currently performing these remedial tasks of industrial disinfection. It would be important to contact these companies in advance to ensure availability, capability, and collaboratively develop a plan if or when a case is confirmed in your facility. Perhaps even inquire about preventative measures offered by these disinfecting services beforehand.
This process is sensitive in nature and in need of an efficient timeline from inception to completed disinfection to allow for limited unavailability and to minimize the direct effect of service disruption in your industry or sector.
Pop-up Distribution Center:
In the event of an unexpected customer closing or being forced to close a facility, operations will need to shift elsewhere in order to continue fulfilling customer orders.
Pop-up or temporary distribution centers either developed internally or through partnerships can be established quickly. These facilities can help ensure that product avoids exorbitant demurrage or per diem charges and allow customer orders to continue to be processed per usual.
Adaptability, responsiveness, collaboration, and receptive communication are all necessary channels to help make your company bullet proof in the event of a crisis, pandemic, or unanticipated shift in market situations.
Confidently navigating the complexities of unchartered waters regarding the continuous operations of your business is critical to the predictive success of your business and survival of conditional circumstances. It is possible we will see major adjustments and future initiative implementation occurring across the board once the pandemic emergency passes. How not to overextend supply chains and maintain manufacturing sustainability.