The following article excerpt features a great discussion on how worse-case scenarios can become teaching opportunities for businesses, challenging them to implement processes that improve overall efficiency and better prepare for disaster. The article is written by Jon Hall, executive vice president of FM Global, and originally appeared here.
It is true that not all damage or business interruption from extreme weather or natural disasters can be avoided, and to some commentators, this is something to be celebrated. As Nassim Taleb wrote in his book Antifragile, frequent non-catastrophic exposure to negative events actually makes us more resilient. Events such as the floods in Thailand, when successfully managed, are not only an opportunity to gather critical information about how to manage through disasters—they also provide priceless information that can be useful under normal circumstances.
For instance, when systems temporarily seize up, alternative processes are spontaneously created that can serve as models for doing things more cheaply and effectively under ordinary conditions. Sometimes, ad-hoc solutions invented during extreme events and under duress lead to industry-transforming ideas that please customers, put competitors at bay and make an organization that much more resilient.
In the case of manufacturing, some businesses have learned that having auxiliary distribution centers in multiple regions are the best way to ensure business continuity in the event of a disaster at primary facilities. Those firms have seen how an expanded distribution center network can minimize supply chain disruptions and lead to quicker delivery times to customers as well as reduced transportation costs compared to normal business conditions.
Effective planning in a resilient business not only requires us to set aside our bias for wishful thinking, but also asks us to find the confidence to confront worst-case scenarios and address risk in a more strategically thoughtful way, by posing these types of questions:
1. How will we do business if our critical systems—manufacturing, storage, electronics and distribution—are rendered inoperable?
2. How can we resume operations quickly following a business disruption, and what will we need to do so?
3. Are there any particularly vulnerable aspects to our business that we can eliminate as opposed to harden?
4. What are the pieces of our business that are so critical that a major investment in hardening or redundancy would be justified?
5. Despite taking many proper precautions, are we still vulnerable to disruption due to outmoded infrastructure in the region?
This brief list is merely a sample of the kinds of questions a truly resilient business should ask itself. The answers are often surprising. They reveal unexamined opportunities to enhance business efficiency, develop innovative solutions and even uncover new markets.
If you would like to speak with us about what DiCentral's supply chain solutions can do to disaster-proof your business, simply email or call.
-Daniel Ford, DiCentral