In the manufacturing industry, time is money. Broken equipment, supply chain disruptions and other problems prevent manufacturing companies from meeting their production goals, resulting in lost revenue and reduced customer satisfaction. In some areas, natural disasters are also a major concern, as they can destroy production equipment and impact operations for several weeks.
For these reasons, business continuity planning is essential for manufacturing companies of every size. A good business continuity plan can help a manufacturing company identify potential risks, minimize business disruptions and continue operations when disaster strikes.
What Is Business Continuity Planning?
Continuity planning is the process of examining a company to determine how each department is likely to fare in the event of a natural disaster, supply chain disruption, cybersecurity threat or other incident. The purpose of continuity planning is to continue operating during one of these events, minimizing lost revenue and ensuring customers receive their orders on time.
Continuity planning is especially important in the manufacturing industry because each company relies on expensive equipment and a network of suppliers to manufacture high-quality products. When manufacturing companies are affected by supply chain issues, natural disasters and other problems, they can quickly lose a lot of revenue due to missed delivery deadlines and reduced customer responsiveness. Proper planning is essential for limiting the effects of a disaster on your manufacturing company.
Business Continuity Plans vs. Disaster Recovery Plans
It's important to understand the difference between continuity planning and disaster recovery planning. Continuity planning focuses on keeping your business running during a disaster, while disaster recovery focuses on restoring critical infrastructure after a disaster has passed. Although they have some activities in common, each plan has different goals. Continuity planning focuses on continuing operations, while disaster recovery planning allows you to determine the best way to resume operations after a disruptive incident.
Steps in Continuity Planning
Now that you understand the difference between a business continuity plan and a disaster recovery plan, it's time to start thinking about how you'd keep your business running in the event of a disruption. Follow these steps to develop a continuity plan that works for your manufacturing company.
Establish a Business Continuity Team
The first step is to establish a team responsible for assessing risk, creating appropriate policies and developing a contingency plan to keep your business on track if a disaster occurs. Since the planning process deals with every aspect of manufacturing operations, your planning team should include at least one person from each department. For example, you may want to include people who are involved in enterprise resource planning, logistics, production scheduling and inventory management.
Conduct a Risk Assessment
Risk assessment allows you to identify potential hazards and determine what might happen if one of those hazards occurs. From a manufacturing perspective, the COVID-19 pandemic is a great example of a hazard that can result in significant financial losses. The pandemic had a major impact on the supply chain, making it difficult for many manufacturers to obtain raw materials. Manufacturing companies also struggled to hire enough labour to manufacture, pack and ship their products.
Ready.gov identifies the following as some of the hazards that could disrupt normal business operations.
- Chemical spills
- Natural disasters
- Pandemic illnesses
- Supply chain failures
- Equipment breakdowns
- Workplace violence
- Utility outages
Perform Business Impact Analysis
Now that you've identified potential hazards, you can perform a business impact analysis, which tries to predict the consequences of one of these business disruptions. Discussing potential outcomes gives you an opportunity to start developing a detailed contingency plan, making it a key aspect of the planning process. The potential impact of a hazard may include lost revenue, increased expenses, reduced customer satisfaction, delays in implementing new business plans or even regulatory fines associated with unsafe working conditions.
Develop a Contingency Plan
A contingency plan outlines how your business will respond if one of the hazards identified in your risk assessment actually occurs. Having a contingency plan in place allows you to continue operating even if you can't follow your normal procedures. If one of your suppliers goes out of business, for example, you may have to order more materials from an existing supplier or find a new supplier immediately to prevent production delays.
Your contingency plan should answer the following questions:
- Under what conditions will your company have to follow the contingency plan?
- What should employees do when a hazard occurs?
- Who needs to be involved in addressing the hazard?
- How will employees be informed that the hazard has occurred?
- When should each activity outlined in the contingency plan be performed?
Test Your Plan
Unless you test your plan, you won't know if it actually works to address each hazard and ensure your business can continue operating in the face of adversity. One of the most effective ways to test a contingency plan is to do a simulation exercise. During a simulation, you'd act as if one of the potential hazards has occurred and go through the process of following your contingency plan as written. This can help you identify flaws and adjust your plan accordingly.
Simulation exercises are expensive and time-consuming, so another option is to do a structured walk-through. During a structured walk-through, each member of the planning team reviews their list of responsibilities and points out potential weaknesses. You may even want to incorporate role-play exercises into this process to make sure your contingency plan is as strong as possible.
IT Services for the Manufacturing Industry
Although disaster recovery is only one component of the continuity planning process, it's an important one. If a disaster occurs, getting your IT systems back online as soon as possible can help you limit financial losses and ensure your employees have the tools they need to do their jobs.
Haycor Computer Solutions helps businesses in Toronto, Vaughan and the York region plan ahead for disasters and restore critical IT infrastructure when needed. Contact us at (905) 707-6775 for help with your unique challenges.