MRO Plant Management: Business continuity defies disruptions
Stringent service levels and the pursuit of efficiencies leave no room for downtime, making business continuity essential to operational excellence.
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Despite best efforts to ensure uptime, disruptions have a way of creeping into even the most disciplined facilities. Tornadoes aren’t good for productivity, and neither is an employee who might inadvertently introduce a virus on a seemingly harmless thumb drive. The problem is compounded by the liabilities inherent in supplier and customer relations throughout the supply chain. In the current business climate, competition means saving pennies and seconds. Therefore, businesses no longer have the luxury of disaster recovery: They need business continuity.
Betty Kildow, principal of Kildow Consulting and a certified business continuity professional (CBCP) with the Disaster Recovery Institute and Fellow of the Business Continuity Institute (FBCI), says that before 9/11, the supply chain wasn’t given much importance in terms of continuity planning. The Icelandic volcano’s impact on European airspace and the tsunami in Japan further emphasized the global impact of local disasters.
“The supply chain is the lifeblood of most businesses, but too many assume things arrive at the warehouse as they should, and get shipped out as they should,” Kildow says. “That has changed a lot in the last five years, as we’ve learned that supply chains are hugely important to us. Still, all too often, as long as the supply chain operations are going well, we tend to take it for granted.”
According to Robert Nilsson, vice president of software and supply chain intelligence for Dematic, business continuity is a big opportunity for the entire materials handling industry. “Without this critical capability,” he says, “it would be like running a train without monitoring the railroad.”
Although a flood could wash out that railroad and lead to a derailment, even more insidious forces could corrode the integrity of the tracks.
Norm Saenz, managing director at St. Onge Co., says many companies thinking about warehouse functionality neglect to consider the labor to execute that functionality.
“Potential labor impacts are as much an issue as a storm,” he says. “Catastrophic events happen suddenly, but workforce issues slowly eat away at an organization until you have a problem.”
Industry experts agree there is a lot of low-hanging fruit where targeted analysis and investment can increase disaster preparedness and competitiveness at the same time. When disruptions unfold, whether a blown fuse or a hurricane, some key steps can ensure continuity of operations.
A seat at—not under—the table
Nilsson says every company should keep business continuity at the front and center of any plan. He emphasizes that business continuity is not an event, but an ongoing part of how a prepared organization should operate.
“You won’t create plan, set it up and forget it,” he says. “You should be managing and monitoring and testing at all levels—from the C-suite down to componentry—before you go into production.”
Nilsson came to materials handling from the telecom and financial services industries, where uptime is expected to be 99.999%, also known as the “five nines.” The supply chain is not running at five nines, he says, but closer to 90% to 95%, especially at the facility level. “Any CFO should be able to calculate how much downtime would cost in a given year,” he says. “It can cost millions just to slow down and ramp back up.”
The biggest business case for business continuity capabilities is that customers ask for it. They want assurances that suppliers have plans in place so they will get product no matter what. “If you can’t answer or meet their needs,” Kildow says, “they will find someone who does. It’s now often a component in requests for proposal.”
From the outset, stakeholders from the information technology (IT) department should be at the business continuity planning table. In the absence of a chief information security officer, Kildow recommends a dedicated position in the IT department for risk analysis and mitigation and recovery planning. “It’s big enough that you can’t handle it as ‘other duties,’” she says.
Warehouse managers also need to take an active role in business continuity planning. Trouble can arise when each business unit performs well and has a sense that it can react to disruptions in a vacuum. “But you might know nothing about what the other unit does or vice versa. If you have a disaster, that disconnect is multiplied 100-fold,” she says. “I might plan on using XYZ resources to react, and you might be planning on using them, too. We need to get out of our silos and use an enterprise-wide approach if business continuity management is going to work well.”
A common thread is lack of leadership, says Mike Cowley, certified professional maintenance manager (CPMM) and president of CE Maintenance Solutions. “Nobody takes the initiative to do anything about business continuity,” he says. “The two biggest things missing in the management world are accountability and discipline. If there are no monthly meetings, no plans, no forecasts, how do you run your process, measure performance and hold people accountable?”
With leadership on board and a team in place, Cowley says the first step is to begin collecting data to measure the performance of facility management. “Half of companies have none of this data, another 20% have some information but are missing the critical stuff, and the rest might have something to work with,” he says. “Some are very proud to have processed 1,500 orders, but that tells you nothing. It’s like saying you still have 50 checks in the book so there must be money in the bank.”
The next phase of the plan is to pursue redundancy and take steps to hedge against disruptions.
Readiness eases recovery
Doug Burns, director of sales and marketing for Lenze Americas, says he is routinely surprised by the number of facilities without current documentation of asset inventory, system architecture, mechanical layouts, electrical layouts, networking or utilities setups, especially with legacy systems.
“You could reach out to a third-party company for those audits,” Burns says, “but it could be as simple as a new college hire or intern who can assess the inventory and do some of that documentation.”
The idea that a part-time teenager might help a business avoid catastrophe illustrates the scope of the problem—and the opportunity. To help prioritize, Cowley recommends business continuity teams target three primary concerns.
“The first is what needs to be fixed that’s going to get someone hurt or killed. With business continuity, safety is central,” Cowley says. “No. 2 is: What’s going to get me thrown in jail?” Compliance issues, water pollution, asbestos and the like are only apparent after an incident or as a result of thorough inspection.
“No. 3 is: What’s going to wake me up at 2 a.m.?” Cowley says. “What programs and policies and procedures are in place throughout the entire organization to identify what will shut us down?”
Power failures might be more common for a facility at the end of an electrical distribution circuit, or they’ll be the last to get restored after a brownout. In any case, it’s essential to have discussions with contractors, service providers and utilities to formalize the response protocol and payment schedules in a given scenario.
“Too many put all their eggs in one basket, or they have no basket at all,” Burns says. “They wait until something breaks and start calling whoever to fix the problem.”
Others operate under the assumption they are protected, but insurance policies are not always optimal, since they are geared toward recovery rather than continuity. Analysis might suggest that a series of generators could be installed for a modest cost compared to extended downtime.
Similarly, too many are overly dependent on suppliers and their ability to continue supplying. “We think we know all of our suppliers and feel comfortable in their capabilities,” Kildow says. “Where it starts to get shaky is when you get beyond that into tier suppliers. It’s like a black hole, the customer has no visibility into who they are or where they come from, and it’s essential to your business.”
If a company finds out a supplier’s component is manufactured with under-aged labor, for instance, the compromised reputation is inherited throughout the supply chain. Even a smaller operation should explore supplier capabilities, especially for single-source suppliers. Even if three suppliers are lined up to provide a certain raw material, it might be prudent to explore a fourth, Cowley says. The same goes for service providers, he says, from utilities to lighting, HVAC, dock levelers and doors.
“When I’m putting out 175 truckloads in one day, if the unloading system breaks I’m in big trouble,” he says. “Put a numerical value on each potentiality, determine the severity and frequency and have a backup plan.”
A catastrophic event could also impact employees, their homes and their ability to get to work, even if facilities and systems are intact. In addition to supplier redundancies, Saenz recommends relationships with one or more temp agencies that can provide expertise for functions like operations, IT and mechanical service and support.
Connected systems and the Internet of Things (IoT) can grant visibility throughout the supply chain and allow for proactive responses. With knowledge of the location of every piece of inventory—from manufacturer to ocean, rail, truck, store and customer—it’s possible to know about disruptions and react immediately.
“A truck headed for a facility that was just taken out by a tornado can be rerouted,” Saenz says. “Or, if you’ve set up partnerships in advance, you might tap a network of 3PL providers to get another building up and running as soon as possible, with your employees or theirs.”
Lenze’s Burns also notes the recurring theme of connectivity, IoT and Industry 4.0, but cautions that too much data is no better than too little. An organization might be collecting piles of data in a file somewhere and, following a disruptive event, is then tasked with digging through the information to find out what went wrong and how to return to normal operations.
“The beauty of implementing remote connectivity is having that backup and simplifying recovery,” Burns says. “In the event of everything from a power outage to extended downtime, you can power back up, reload the state the system was in and pick up where you left off.”
Connectivity also enables predictive maintenance that can prevent downtime altogether. As opposed to diagnosing after the fact, Burns sees increased interest in using data for real-time monitoring and response. If a bearing is vibrating more than usual, a technician can be dispatched before it fails.
Virtual infrastructure can also benefit from real-time monitoring and preventative maintenance. A server has a certain memory capacity, and if it is not occasionally purged it will keep piling up until performance suffers. Additionally, few customers periodically back up their databases, according to Chris Krafft, service manager of the automated systems division for SSI Schaefer Systems International.
“To make matters worse, if they back up a ‘sick’ database they have just backed up the sickness,” Krafft says. “A recent customer hadn’t backed it up in six months because the person responsible was no longer there. In that case, it wouldn’t be worth it to try to recover the old database, and they would essentially have to start from scratch and some assumptions.”
Burns recognizes that many customers face a significant shift in perspective from resolving after the fact to optimizing production. A good strategy, he suggests, is to identify current pinch points and problem areas.
“Is it a specific piece of equipment, or certain package attributes or load weights? Start prioritizing,” he says. “The problem with Big Data is you get a lot of data, but if you’re monitoring 10,000 bearings you can identify the 10 that are most problematic.”
Data should also be segregated into role-dependent information. Electricians are interested in currents and the condition of the device, Burns says, operations wants to monitor production and recirculation rates, and the front office wants to know higher-level rates and benchmarks between facilities.
Of course, connected systems are only as effective as their underlying technologies. Mission-critical software might be based both in DCs and data centers, and redundancies here are important as well. A facility-based warehouse control system could instead be hosted in the data center—or two data centers. Failing a seamless changeover of an automated system, it is wise to prepare to run manual operations in a worst-case scenario, even if at a slower pace.
Companies mentioned in this article
• CE Maintenance Solutions
• Kildow Consulting
• Lenze Americas
• SSI Schaefer Systems International
• St. Onge Company
About the AuthorJosh Bond, Senior Editor Josh Bond is Senior Editor for Modern, and was formerly Modern’s lift truck columnist and associate editor. He has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce University.
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