BY DAVID MALONEY, SENIOR EDITOR SYSTEMS INTEGRATION
strategicinsight
in case of
emergency …
Your company may be prepared for fires, floods, and
labor strikes. But does it have a plan for dealing with
material handling system breakdowns?
ALTHOUGH YOU WOULDN’T KNOW IT FROM THE HEADLINES, THE BIGGEST
threats to global supply chains aren’t necessarily the most sensational: pirates, for instance,
or hurricanes or terrorist attacks. Far more serious are the threats posed by mundane occurrences like material handling system breakdowns or DC power outages. For one thing, they
have a higher likelihood of occurrence. For another, they have the potential to bring order
fulfillment operations to a halt, with potentially devastating effects on customer service.
To minimize these types of risks, smart facility managers make it a point to develop
detailed contingency plans for dealing with disruption. But how do you go about that task?
DC VELOCITY asked several leading facility designers and systems integrators for advice on
making operations more resilient and creating a bulletproof business recovery plan.
Resiliency, not redundancy
The focus of a contingency plan should be resiliency, not necessarily redundancy, according
to the experts. The main point of the exercise is to ensure that the facility can weather a sup-
ply chain storm. While that may include duplication of some processes and equipment, it
can also be as simple as outlining alternative methods to keep product flowing.
Decisions regarding how much and what kind of redundant equipment is needed will be
dictated by cost, the likelihood of disruption, and the company’s tolerance for risk. What
can a facility do without? How long can its supply chain afford an outage? Is the product
being stored there going to spoil or deteriorate over time (like perishable food and certain
pharmaceuticals)?
“One thing I ask my clients is, ‘What is the cost of downtime to you?’ It can be hundreds
of thousands of dollars in labor costs, missed shipments, and lost customer service,” says Bob
Carver, vice president of Vargo Adaptive Software.
“Do you want to stay in business as if nothing happened?” asks Lou Cerny, vice president
at Sedlak Management Consultants. If that’s the case, the best course may be to invest in
extensive backup systems. But that can be costly, he says. After weighing the expense, companies sometimes decide to back up only those functions that are critical to their supply
chains, he adds.
Ready for the worst
One of the functions companies commonly target for backup is the facility’s electrical sys-
tem. Power outages are the number one cause of downtime in distribution centers, especial-
