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Preparing for Supply Chain Disruptions with Business Continuity Plans

Posted on Mon, Mar 25, 2013

In October 2012, Hurricane Sandy’s unprecedented devastation caused havoc on the mid-Atlantic and east coast of the U.S. Infrastructure and supplies chain disruptions occurred across highly populated areas and multiple jurisdictions, severely affecting thousands of companies.  Ensuring ample supplies in the midst of an incident can be challenging. By identifying and pre-contracting vendors and alternate suppliers prior to an incident, a company improves its ability to quickly and successfully respond to incidents.

Hurricane Sandy’s storm surges and consequential flooding disrupted port operations and cut off dockage of incoming fuel tankers. Flooded automated pipeline fuel delivery equipment became inoperable. Power failures ceased fuel terminals transfers of gasoline into tanker trucks, and gas stations could not be restocked or operate pumps. As a result of the shortage, frustrated residents and businesses were forced to either go without the essential fuel or endure long lines and extreme supply uncertainty. The severe supply interruption created an additional level of business continuity issues.

Companies are often at the mercy of the “red tape” of governmental processes when disruptions envelope a wide area. In a business-driven society, regulations safeguard employees' rights, protect the environment, and/or monitor potential injustices. But in the case of Hurricane Sandy, licensing requirements and potential financial penalties exacerbated an already fragile supply chain.

Two bills, co-sponsored by Sen. Jennifer Beck and Sen. Robert Gordon, have been presented by the Senate Transportation Committee to streamline gasoline supply chain disruptions in the event of an emergency.

1. “Bill S-2581, provides a mechanism for fuel merchants to import motor fuel during the time of a state of emergency. Under current law, fuel merchants cannot purchase motor fuel from another state and import it in New Jersey unless the merchant first obtains a distributor’s license. After Hurricane Sandy, Governor Christie issued an executive order temporarily waiving this licensing provision to allow fuel to travel across state lines to boost supplies in New Jersey. The bill would eliminate the need for the Governor to issue future executive orders.” - Senator Jennifer Beck

2.  “Bill S-2582, provides that during a state of emergency, when a retail motor fuel dealer exhausts the supply of a lowest grade gas that dealer can sell any remaining supply of higher octane motor fuel at the same price as the price of the lowest grade motor fuel.”  - Senator Jennifer Beck

Senator Beck stated that the fuel shortage slowed the recovery process. “These bills remove regulatory hurdles that restrict the fuel supply during emergencies when we can ill afford red tape”, said Beck. While minimizing “red tape” helps streamline and ease the recovery process, companies should also prepare for, and expect delayed or interrupted supply availability after large-scale incident.

A business continuity plan (BCP) can help minimize or counteract many of the potential impacts of an incident.  Companies should utilize this tool to prepare for incidents that could impair or impede the ability to operate as a result of a temporary or permanent loss of infrastructure, equipment, supplies, critical staff, or data. Companies  can endure significant challenges and potential financial losses.

The following minimum business continuity planning elements should be considered when developing a BCP:

  • Identify critical business processes to maintain continued operation and mitigate as practicable.
  • Identify the triggering events that initiate an emergency action, and specify checklist items to be taken.
  • Train assigned personnel to complete required checklist action(s) in case business continuity implementation is necessary.
  • Identify typical transportation methods and necessary staffing levels to reveal potential threats to continued productivity.
  • Identify key vendor and supply chain requirements. Transportation delays could affect delivery times of essential supplies. Plan and mitigate accordingly.
  • Identify technology requirements such as back up timelines, communication methods, and if possible, mitigate any potential networking disruptions.
  • Identify and arrange for potential alternate locations, if applicable (ex. satellite offices, home-based opportunities, alternate locations).
  • Identify recovery time objectives for each critical process.
  • Review and update personnel contact information and notification procedures.
  • Minimize vulnerabilities by proactively implementing measures to ensure the safety and security of the facility and employees, as needed.
  • Review emergency action and response plans with employees.

For tips and best practices on designing a crisis management program, download Best Practices for Crisis Management.

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Tags: DOT, Business Continuity, Supply Chain, Business Continuity Plan, Business Disruption