A business continuity plan for manufacturing is all about preplanning your survival and restoration in the event of a major accident or event that shuts down your business. The plan should have two primary goals: to minimize the severity or impact of a shutdown and to maximize your ability to recover quickly after a disaster. All the details of your plan should fall under one or the other of these categories. Some of those details will have to do with key persons, some will have to do with supply lines, some will address critical utilities, and some will address governing regulations, lawsuits, injuries, and communications with your employees, suppliers, customers and possibly even the media.
It is impossible to overlay a generic template and expect it to work for your business. Each manufacturer has its own particular considerations, which is why a disaster prevention and recovery plan is not something you can download from the web and stick in a binder. You’ll need to either assign internal staff to work with your leadership and the line managers of each of your departments to create a tailored plan from their input or hire a specialist firm to do that job while you focus on production and operations. One way or another, you will find a serious and effective plan requires a serious investment. But it can yield business-saving results.
What Do You Do
To create your manufacturing business continuity plan, you will need to agree on your core business objectives: what you do and who relies on your doing it. You need to define, with numbers, how much you produce, who your priority customers are, what your priority payments/debts are, and how much money you would need in various circumstances to retain employees and keep product flowing.
Taking these first definitional steps forces your strategy team to identify and consolidate the list of what is needed to continue operating. This list allows you not only to prioritize cash needs. It also can help spotlight your most crucial production lines—those for which there are no workarounds. Those are areas you will need to address with insurance or with some kind of alternative production plan or with both. In other cases, there are workarounds—even if they are inconvenient. For example, if a fire destroys your warehouse, you might be able to increase production to fill orders, albeit with some delay. If a production line goes down, it might be possible to run other lines for an extra shift.
By going through the process of defining your business objectives, you will also be able to immediately identify which customers’ orders can be delayed and which cannot. Consolidating your core business objectives will help you clearly articulate priorities and highlight where you should concentrate your risk prevention efforts.
You will also be better able to identify what kind of insurance coverage you need for property loss and equipment breakdown. Products differ based on what you want them to do. Would you be able to rent a substitute if a piece of equipment failed? Who would pay for that, and would insurance cover the loss of income while the substitute was procured and brought online? What about insuring that piece of equipment once it’s in your possession? Maybe you would have to sub out some of your production while awaiting a repair of your equipment. Can that kind of cost be insured against? You can see how far-reaching the insights from just this first step can be.
On Whom Do You Rely
Manufacturers count on others—supply lines—both incoming and outgoing. Identifying those players allows you to determine external sources of risk. For example, maybe you cannot make certain parts without stock from certain suppliers, or maybe you rely on a single subcontractor for part of your manufacturing process. If something affects your supply chain, either incoming or outgoing, you could face production problems or income loss. Not all insurance policies cover supply chain risks, so if a loss of one of your suppliers or subcontractors would cause serious disruption to your manufacturing or delivery, you will need to talk to an insurance professional about adding that kind of coverage to your business interruption or business income protection insurance policy.
About Precision Manufacturing Insurance Services
Precision Manufacturing Insurance Services (PMIS), specialists in insuring manufacturers throughout California, can provide you with both the equipment breakdown coverage and business interruption insurance you require and the loss control services you need to help manage your risk. We can also review your entire portfolio and advise you on other areas of business protection. Give us a call at 855.910.5788.