Page 34 - MetalForming November 2014

FEMA-Based Disaster-Recovery Plan
Toyota is Asking its Suppliers:
If your plant is disabled by fire, flood, earthquake or other disaster, what would you do and how much time would you need to relaunch production?
So goes a recent Automotive News report describing the automaker’s push to have suppliers develop and document disaster-recovery plans. Toyota already has conducted a census of its supplies in Japan, and now has embarked on a similar plan throughout North America with its Tier 2 and Tier 3 suppliers.
To get started, Toyota has asked 400 North American suppliers to “identify any key parts produced by just one factory...and asked the 400 to develop backup production plans in case a single-source factory shuts down unexpectedly,” writes reporter David Sedgwick.
they have an insurance program that includes business-interruption cover- age. They wrongly assume that should they incur a covered loss, their insur- ance will get them back in business and make them whole, as if the loss never happened.
As an insurance agent for the last 32 years, I can tell you from experience that while business-interruption cov- erage is critical, it will not always make a business whole. Business interruption pays for loss of profits and continuing expenses, but it will not pay for lost customers. And, once your customers leave and take their business to anoth- er metalformer, because you can’t sup- ply their orders, earning back their business when your company comes back online is not a given.
As Termax president Bill Smith says:
“The best way to keep your cus- tomers, and reduce your loss down- time, is to have a business-continuity plan that minimizes your chance for being out of business for very long, and also have a comprehensive insur- ance program from a provider that spe- cializes in working with manufacturers. Our customers know we are prepared and that we will be there to supply the product they need.”
A Three-Legged Stool
Companies need to look at their recovery strategy as the proverbial three-legged stool: property and busi- ness-interruption insurance, disaster recovery and business continuity. Small to midsized companies would do well to look at what larger companies have done to create effective recovery strate-
gies, and pattern their own policies similarly. It takes only a brief look at the Fortune 1000 to understand that they all have this three-legged approach in place. A company that deploys this strategy early will quickly realize that it becomes an affordable asset that con- forms to its needs as the company grows.
Planning for a disaster is critical and addresses many fiduciary responsibil- ities that a company has. But what hap- pens when disaster strikes? The first 48 to 72 hours are critical. This is the window where the acid created by fire and water starts corroding equipment, and black mold begins its destructive journey. Taking steps to contain this damage not only saves thousands of dollars, it can determine when your business will resume operations. It is this critical stage where a friend is most needed following a disaster.
“The methodology that Standfast Global used to generate the Termax BCP was based on NFPA (National Fire Protection Association) 1600,” says McCrane. “It is a disaster- and emer- gency-management standard approved by FEMA for BCP development, com- bined with a risk-transfer model to reduce the impact of a potential dis- ruption to operations.”
Why Belfor, and Why the Cloud?
There are many remediation com- panies that can address these issues, but having a relationship prior to the disaster will determine if that quali- fied company will arrive in a timely fashion, and with the correct equip- ment. It is equally important to have the relationship with a company that
has the resources to respond to all lev- els of disasters.
Termax and Standfast Global select- ed Belfor as the preferred vendor to address any post-disaster remediation needs they may experience because, in part, its footprint is national with international interests. Belfor identi- fied each location at which Termax has interests and committed to a response time via its Red Alert agreement. As with many manufacturers, the equip- ment Termax uses is not readily avail- able off-the-shelf. So, being in a posi- tion to repair equipment rather than having to replace equipment promises to allow Belfor to return Termax to nor- mal operations in weeks rather than months, following a disaster. The cloud-based plan is easily updated and available from any web-enabled device.
And, lastly, while the most impor- tant reason to have a worldclass BCP is to ensure that the business will con- tinue to operate following a disaster, another significant benefit is that, since so few businesses really have a sus- tainable BCP in place, any business with a significant FEMA-based plan can use it to gain market share. Who do you think the large automotive manu- facturers, for example, would rather do business with—a supplier with a cloud-based formal and fully exe- cutable FEMA-based BCP, or a com- pany whose BCP amounts to a few pages of “this is what we hope we would do if there was a disaster?”
Termax is a step ahead of its com- petition and promotes its cloud based BCP as an advantage to its customers.
MF
Learn More About this Topic
...by attending a webinar, spon- sored by the Precision Metalforming Association, on December 3, 2014. Presenter (and author of this article) Ron Pitcher will have plenty more to say on the topic of disaster-recovery plans for metalforming companies. Learn more and register to attend by visiting www.pma.org/meetings.
32 MetalForming/November 2014
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