More about Resiliency – Avoiding Single Points of Failure
–by Harvey Betan–
As we continue along the Business Continuity spectrum, from Disaster Recovery (technology) to Business Continuity (staff and functionality), we proceed to look at vendor resiliency. I humbly ask if you feel that is a sufficient stopping point? It may be if all you want is to ensure that you can manufacture product, but I submit there is something missing. To actually get product out the door, you must look to your customers and clients. Put another way, one has reviewed and ensured availability of internal operation, looked to suppliers and vendors to ensure material delivery etc., now one needs to look at the remaining side, where the product goes. Seriously consider the following questions, “Is my customer list skewed to a single or a small few very large customers?”, Should my largest client have a problem, am I protected?”. Just as one wants to be shielded from a particular vendor, one must be shielded from a customer potentially being unavailable as well. After all should something happen to one or more of these major clients how will the enterprise continue? If you need to migrate to your recovery location can you maintain the same commitments of product delivery? Are the roads and thoroughfares similar? Will it cost you more to deliver product to your major client(s).
There is no question that we are currently facing tough economic times. Organizations should have verified that the supply chain will continue, but what of the customers? I will use a few examples here but it should not be taken as an editorial on these industries these are simply used for effect. Let’s say you are a small or medium sized auto parts manufacturer (e.g. tires). Most likely your major client is one of the large automakers in Detroit. Do you know what the impact would be to you should the slump continue? Here is another example. You are a manufacturer of plasterboard for new homes. The housing market has begun a slump, there is less building now and this trend will probably continue for the next six months. Now what?? How much inventory can you store or maintain? How economically stable are your best customers?
What you should be doing is going beyond resiliency and asking your client/customers important questions to ensure their continuity. Review your dependence upon limited or singular customers. We have helped others and can help you identify the proper responses to: How can I evaluate the impact of my customers? How can I determine alternatives? How can I get information regarding customer without alienating them? Does the client you depend upon most have a tested BC or DR plan? If you need to go to your recovery site will you be able to schedule deliveries at the same level as normal? Will the cost of delivery be similar to current levels? Is your product sufficiently competitive with your market peers? What differentiates your product from your peers? Are you able to withstand an aggressive competitor? Are you sufficiently insulated from competition? These are just a few of the issues to address; many more questions that may be particular to your industry may require investigation and assessment.
Harvey Betan is a Certified Business Continuity Planning consultant. He migrated to Business Continuity after restoring a large insurance company with a major office in the World Trade Center on September 11. His goal is to provide leadership and cooperative team productivity to anticipate and overcome issues concerning continuity and recovery. He has guided government agencies and the private arena to prepare plans and exercises to determine readiness and impact of specific events. Mr. Betan has contributed an article to Continuity Insights, conducted seminars at DRJ and CPM conferences on Pandemic Planning, Crisis Management and on numerous expert panels on Business Continuity Planning. He is also an adjunct professor at Manhattan College.