Business Continuity Planning
Business continuity planning is vital for all industries but is especially important for manufacturing organisations. Manufacturing organisations are a midpoint in the supply chain and with an increasingly global network, any natural or technological crises, which causes an outage, can result in more than just business interruption. It can also lead to revenue loss, loss of customers and sometimes result in forced closure. These outcomes are likely to have a knock-on effect on many other organisations within the supply chain of that manufacturing business.
For a manufacturing line to be run effectively, disruptions to the level of staffing, machinery and the volume and quality of materials must be avoided. That’s why it is crucial that manufacturing organisations have comprehensive business continuity plans in place, covering these three main areas.
So, let’s take a closer look at the key areas that should be considered, based on information from the Business Continuity Institute.
What should be included in your Business Continuity Plan?
1. Staffing
Your staff play an integral part in keeping the production line operational and to do this, staff must be trained to a high standard. This ensures that operations can be carried out efficiently and effectively. A lack of training may lead to mistakes and disruptions in the production line.
Investing enough time and money into training packages for new and existing staff is essential for minimising mistakes and ensuring operations are carried out in a timely manner. In fact, training all staff across a range of business activities ensures that every day operations can continue as normal should staff leave the company, take annual leave during busy periods, or fall sick.
2. Materials
Manufacturing organisations will typically use a variety of materials and services during the production process. Some materials may be sourced in-house from other internal departments, whilst others may be supplied by other organisations. Ensuring the supply chain is healthy is critical to business continuity planning.
If a manufacturer limits themselves to a single supplier, they are opening themselves to risk. Should the supplier fail to deliver the required components, the manufacturing process will grind to a halt. This can cause internal process disruption, missed delivery dates and unhappy customers.
Therefore, having a diverse supply chain is essential so if one supply chain fails, there are others that can deliver. Additionally, with growing inflation rates the costs of one supplier may become too expensive, which is when a secondary or even tertiary vendor may be required.
Quality inspections should also be carried out upon receiving materials from suppliers. This prevents any faulty goods being sent down the production line, which may result in product recalls leading to brand reputation issues.
3. Machinery
Fully functioning tools and factory equipment form the basis of any manufacturing organisation and a fault in them can cause major disruptions to the normal operations of the business.
Machine downtime is the time accumulated when your manufacturing process is stopped for an unplanned event. The most direct impact of machine downtime is a loss in production. If you typically produce 60 units per hour with an average profit per unit of £20, a single hour of downtime costs your company £1,200 in lost revenue.
That’s why maintaining and checking equipment is safe and meets regulatory standards is critical because if a crucial piece of machinery breaks, operations could be interrupted, meaning both time and money could be lost.
Some steps you could take to mitigate the risk of faulty machinery and financial losses as a direct result are to
- Keep and maintain records of approved repairers, parts suppliers and hire companies that you could contact in the event of a break down
- Look into any warranty options available for any machinery
- Consult your insurance broker prior to purchasing any machinery as it may be excluded by your current policy.
- Check for wear and tear on a regular basis and address any issues as soon as possible
- Ask or search for user reviews and testimonials pr- purchase to ensure there are no common problems with the functioning of the machinery or equipment
Business continuity plans are an invaluable tool to ensure the everyday operation of your manufacturing business. They will support your recovery should something go wrong.
We're here to help
Sometimes an event will cause more disruption than your everyday plans can manage. In these instances, you may need to close your business for a short period of time or reduce your usual operating levels as you recover from the incident. You should support any business continuity plans with a comprehensive insurance package. This should include a Business Interruption insurance policy that will cover any consequential financial losses your business may sustain should operations need to be suspended. The right insurance solution will allow you to rebuild, refurbish or relocate, and get back up and running again.
Whilst the building itself and the contents within it are usually covered with buildings and contents insurance, your operational costs and expected incomes are not. Having Business Interruption insurance in place will allow you to recover from a disaster and may be the difference between business survival and going under.
Our expert advisers will provide guidance on the best Business Interruption Insurance for your business and can refer you to one of our risk management partners to develop a robust continuity plan. Call us on 01480 272727 or send us an email at enquiries@barnesinsurancebroker.co.uk and we’ll be in touch.
