In the present world, used to ubiquitous IT systems, constant connection, and fast information and supplies flow, a prolonged downtime can be a real nightmare for the manufacturing industry.
The issues may stem from human error, natural disasters (often happening because of climate change), or other reasons, threatening your reputation, business operations, and financial situation.
For this reason, it is no wonder that business continuity and disaster recovery (DR) are considered to be crucial for the manufacturing sector all around the world.
Most organizations are aware of the consequences of not having a disaster recovery plan in advance, but they still tend to have some doubts and misconceptions concerning its preparations.
Due to such mistakes, often associated with understanding downtime tolerance and the best practices in the planning process, a manufacturing company can have a false sense of security without being aware that they are actually exposed to high risk.
It is essential to understand business continuity and disaster recovery planning strategies well in order to avoid any mistakes and make keeping a company safe the highest priority. Continue reading to find out more on this subject!
What Can Be Called a Disaster in the Manufacturing Industry?
When you hear the term "disaster," you may automatically have the image of a flood, fire, explosion, hurricane, major power outages, and so on. We tend to think of disasters as happening on a large scale but relatively rarely.
As a result, a manufacturing company may think that it will probably never happen to their production facilities, data centers, or any other crucial location.
While the already mentioned natural occurrences are undoubtedly a factor, there are also many less spectacular events that can cause business disruptions.
For example, it can be a blown boiler, leaking air conditioner, mold, overheated server space, and many other physical issues.
What is more, bear in mind that even the best IT managers with the highest-quality IT infrastructure cannot prevent all the software and hardware failures or human errors of the IT team members.
If all the IT systems are in check, they may not cause major problems but it often happens that business processes in a company depend on the efficiency of small, outwardly unimportant, hard-to-fix add-ons.
The scale of an event does not define a disaster - the effects are what matters. Every failure leading to downtime can be a disaster if it has a significant business impact.
If manufacturers fail to meet the deadline and break the supply chain, there is a significant risk that long-term customers may stop trusting them and look for another supplier.
As it can result in major financial losses, all the manufacturing companies should take care of their business continuity and disaster recovery planning in order to be prepared for any risk factor.
What Is Business Continuity Planning (BCP)?
In order to fully understand what a disaster recovery plan is, it is also worth knowing what business continuity planning is all about.
Such a process is a crucial element of creating a strategy for prevention and recovery for any potential risk that may threaten a company.
A business continuity plan focuses on making sure that the workforce and assets (like the production lines) are properly protected and able to be productive even when disasters happen.
A BCP needs to be prepared in advance and requires input from all the key stakeholders and employees.
It is crucial for such a plan to cover any risks that are associated with a particular industry (such as the manufacturing sector). Apart from natural disasters and other weather-related events, there can be, for instance, cyber-attacks leading to data loss.
When all the possible risks are acknowledged, a business continuity plan should also cover:
- Applying procedures and safeguards to minimize the risk factors
- Identifying the possible impact of every risk on the business operations
- Testing the established procedures to make sure they work accurately
- Reviewing the business continuity planning process to check if it is still valid
A BCP is crucial for manufacturing companies and any other business. Due to threats and business disruptions, an organization may be faced with higher expenses and loss of revenue, resulting in lower profitability.
Bear in mind that your manufacturing business should not rely on insurance entirely because it does not cover all the costs. What is more, it will not refund you for the customers you lose for the sake of your competitors.
A disaster recovery plan is a significant element of a BCP because it deals with risk analysis and procedures adapted to many different difficulties endangering business processes.
Why Is a Disaster Recovery Plan So Vital?
Disaster recovery planning is crucial for your business continuity because, without a quick and appropriate reaction to a crisis, your manufacturing company may not be able to function properly. Here are some of the significant reasons why it is worth taking thorough care of a disaster recovery plan:
- A relatively high probability of failure. As the Federal Emergency Management Agency (FEMA) reports, as many as 90% of smaller companies fail within a year after a disaster if they cannot make their business functions work properly again within 5 days maximum.
Moreover, 40-60% of them never reopen. Such alarming statistics show that fast recovery is vital, so you should always have your DR strategy prepared before disasters happen.
- Short response time reduces financial losses. We all know that time is money, especially in the manufacturing industry.
Shorter response time is very significant to the viability of your company and will help you to avoid huge financial losses. One of the primary points of a disaster recovery plan is to have high availability of services ensuring continuity.
- Losing data can be very detrimental to your organization. When manufacturers lose essential data, they are often unable to continue their work and it results in huge downtime and overwhelming downtime costs.
However, with advanced cloud technology, disaster recovery plans can be improved and applied faster.
Using cloud-based disaster recovery as a service (DRaaS), you can worry about your restricted budget and resources less as it is an accessible and affordable solution.
As a result, you do not have to spend a lot of money on expensive infrastructure, and you can apply your plans quickly.
Also, a cloud-based DR plan is perfect for business owners with multi-location manufacturing facilities, and it needs less testing time and a smaller disaster recovery team.
How to Prepare a Disaster Recovery Plan - A Template for Manufacturers
Now, when you already know the importance of a disaster recovery plan for your business continuity, it is time to find out what steps need to be taken to create one for your organization. Check out our template for manufacturers!
Set Priorities of Your Business Processes
Not every business process in your company is equally important. In preparing efficient DR plans, prioritization is one of the first steps to be taken by manufacturers.
List all the "Priority 1" processes that cannot be put on hold for even a short period of time - they can be, for example, your order shipping systems and your customer service channels.
These processes probably need a mirroring solution that will provide your business with an almost immediate recovery point.
On the other hand, think what are your "priority 2" processes that do not require as fast a reaction.
In the case of some operations, customers are not likely to feel the business impact of a disaster straight away, and a company can continue working despite that problem.
There can also be "priority 3" processes that may be, for instance, significant for your employees but not affect the supply chain and the customers much.
To assess such priorities properly, you need to spend some time interviewing key business teams. Bear in mind not to treat it as an IT task - it needs constant, well-organized attention of the business decision-makers.
When you come up with some assumptions, try to challenge them and discuss them together - make sure you know what is likely to happen due to particular business disruptions.
Also, you should evaluate each process's independence and its effect on all the resources involved. Thanks to such discussions, you will consider all the possible difficulties comprehensively. Always remember to document all the conclusions you come up with together.
First, the business requirements should be taken into consideration, and then the application. When you analyze all your vital business functions, the next step is to think which applications can be assigned to those functions.
You need to know, for example:
- What can temporarily substitute the lacking systems
- If any of the work can be performed manually (and for what maximum period)
- How independent certain processes are, concerning both functions and people
- How data can be gathered and re-entered to the system when some of the processes become manual
Such an analysis will create a foundation for your disaster recovery plan, and it will be useful for other criteria in your DR matrix, including solutions and testing.
Estimate Downtime Tolerances
When you assess and prioritize your business requirements, you also have to estimate downtime tolerances for every business application in your company.
Keep in mind that downtime assumptions in the manufacturing industry tend to be inaccurate.
Many companies see that applications that seemed of less importance at first glance can suddenly disrupt operations when they go down, making the pre-assessed downtime tolerance impossible to meet.
Moreover, it often turns out that the manual processes or paper back-ups that were supposed to help in disaster recovery are not viable enough.
During the interview phase, you should talk about such issues because it may help evaluate the true downtime needs that should be formalized and accepted by stakeholders.
Consider the Solutions and Costs
When we deal with integrated IT environments, downtime costs can be huge. You probably know that customers may not be all right with delays, and if your manufacturing organization is down for a few days, it can lose a lot of profits. Such an estimated revenue loss has to be included in your disaster recovery plan.
However, take into account that downtime costs are more than just the lost revenue. For instance, if you need to turn to a manual process during a challenging event, there may be additional costs associated with a less efficient workforce.
You need to know:
- How to recover work that is done manually
- What would be the cost if a manual process does not bring sufficient effects
- What is your method to account for all the transactions that happen during the downtime
If your organization has been operating for many years without checking the manual processes, it may be surprising what the company cannot do and what costs are included.
It is important to note that evaluating the real downtime costs may be the most challenging element of a DR plan. It is because they are unique to your specific company.
There is no one standardized way to measure them, and there is no one solution that can equally help all the manufacturing businesses.
No matter if it is a sophisticated solution or a simple one - the most important thing is that it should be perfectly adjusted to your company and ensure it with business continuity.
Test Your DR Plans in All Possible Ways
Your DR matrix sums up all of these considerations into a disaster recovery plan that presents how all the elements come together: your business applications along with their acceptable downtime tolerance, a solution, and its estimated price.
When you have all of that, you should test your DR through simulations. However, it is another element of disaster recovery plans that tends to be tricky.
It often happens that businesses test their applications without taking into consideration the interdependencies and connections or the downstream/upstream impact.
When checking their back-up plan, an organization usually begins with approaching their core ERP systems because they are convinced that if there is a DR plan to restore its primary systems, everything will be alright.
Nevertheless, the present business processes often rely on outside systems, such as cloud-based systems, Windows servers in data centers, or banking systems.
For this reason, a cursory test (or a core system test) does not involve all the dependencies that are there. To check your disaster recovery plan more comprehensively, you can:
- Test the "Priority 1" processes. It is not really possible to test every single business application, but it is essential to check all of those you marked as the top-priority ones before. Provide a simulation of a typical day's activity, taking into consideration the potential effect on your customers.
- Take a coordinated approach. The same as with prioritizing your business requirements, bear in mind that testing your disaster recovery plan is not something that only the IT specialists should take care of. As it needs to be centered around the business requirements, all the stakeholders should assess and test it.
- Remember about documentation. Make sure that all your testing plan results are formalized.
- Test your workforce as well. Apart from testing the processes, test your staff during downtime in order to create adequate processes around them. Ensure that every employee knows what they should do during downtime and that they have all the tools they need to use when a disaster event occurs.
- Be honest and keep an open mind. Manufacturers and other businesses tend to document the failed tests thoroughly and then do nothing to fix the issues with their disaster recovery plans - do not let it happen to your organization!
Where to Search for Professional Help with Disaster Recovery Plans
It is understandable that preparing a polished DR plan may be challenging for some manufacturers. You may have problems with proper risk analysis, covering all the possible human errors or natural disasters, and keeping the supply chain unbroken despite any difficult event.
In such a situation, you can always invest in disaster recovery as a service. With the help of a qualified and experienced disaster recovery team, businesses from the manufacturing industry can be prepared for any circumstances and deal with various challenges without any revenue loss.
Here at MADI, we are focused on helping companies to keep their business continuity in any location. For almost 30 years, we have been deploying temporary employees in various crisis situations.
Thanks to our business continuity staffing services, we can reduce the stress and effort on your side and let you concentrate on making your business fully recovered.
We can find the necessary skilled or unskilled labor anywhere across the United States, usually within two weeks, and time is always crucial for manufacturers!
We have Site Supervisors who will take care of the onboarding process at your manufacturing facilities and cooperate directly with your managers.
On top of that, we will take care of background-checking, drug-testing, and transferring the temporary workforce to your location.
It is also worth knowing that the payroll is administered by our team and the whole staff is covered by our unemployment insurance and workers' compensation.
To get more information on our business continuity and disaster recovery services for manufacturers (or another industry), you can reach us by phone: 800-780-0500 or a contact form.