Consequences of Not Investing in a Business Continuity Plan (BCP)

A fire ensued at a client’s key supplier located in Latin America. This facility was the sole producer of one type of consumer product that was sold in North America. The building and all production/packaging machines were destroyed, thus shutting down production for this product. Eventually I was called in to work on the restoration efforts, which involved removing the tooling, preparing it for shipment to the manufacturer for inspection/possible refurbishment, management of the refurbishment efforts, tooling/process re-qualification and production start-up at three alternate facilities located in three countries on another continent. Both the client and this supplier were without a BCP, which caused them to suffer significant financial loss. Due to the lack of a BCP, the time to decide, act and recover took much longer than necessary.

Here is what ensued:

-It took this client over two weeks to identify and assemble the correct management personnel so that a reaction plan could be generated. Actual recovery work did not commence until after the third week. If a comprehensive BCP existed, the team would have known how to proceed, efforts would have commenced immediately and this critical time would not have been lost.

-I found out about the fire and contacted the supplier a few weeks after the disaster. Upon my contact, they promptly added me to the recovery team, and I was off to the site of the fire. My Spanish competency helped things go faster and smoother once on site. Prior to this, communication was a problem. A comprehensive BCP would have identified me as a resource and I could have been brought in earlier, thus accelerating progress.

-Due to the panic mode, efforts were not coordinated well and inconsistent direction ensued. This caused confusion, waste and further delays. At many times personnel on the ground were not sure just how to proceed, and progress was frequently halted.

My estimate is that the recovery time could have been cut in half if my client and their supplier had BCPs, thus avoiding these negative consequences to this business unit:

-Product in the pipeline ran out, and the retailers could not be provided with this hot selling product. Competitors took over this prime retail space. I still now have difficulty finding this product on retailer’s shelves. About 75% of the market share for this produce has been lost. Sales volume plummeted and has not recovered to date.

  • -The recovery expenses were much higher what would have been if a BCP existed. Some major items were:
    • Extensive travel to both Latin America and Asia
    • Consultant fees
    • Tooling rework and replacement (not all tools were repairable)
    • Expedited (air) shipment of finished product
    • Expedited raw material shipments (air) from North America
    • Process re-qualification at three facilities
  • The Latin American supplier went out of business!
  • Reduced margin due to higher supplier price and associated other cost
  • Sales of this product was significantly reduced
  • The future was mortgaged as critical technical resources were redeployed to this recovery effort. New product development was put on hold, thus negatively affecting future new product release, customer commitments/satisfaction, revenue and sales.

A comprehensive BCP is a wise investment. Successful organizations have one that is kept current.

The DESARA Group is here to help! Contact us today at 631-909-3570.