Monday, August 29, 2011

Planning Pays

Hurricane Irene took more than 40 lives, and left millions of people without electric power for hours or a few days, flooded neighborhoods, disrupted business, left thousands stranded for a few days in U.S. airports, damaged homes and business buildings up and down the east coast, and cost the late summer tourist industry on the east coast millions of dollars.

All on the anniversary of Hurricane Katrina.

By contrast, more than 1,800 people died during or as a result of Katrina, and the estimated property damage was around $81-Billion.

The Institute for Crisis Management has been saying for years that two-thirds of all business or organizational crises are preventable, and those crises that cannot be prevented, like a hurricane, can be significantly less traumatic and damaging with the proper planning and training.

Irene has helped prove that point, again.

Those organizations that had an operational crisis plan were prepared to protect their property and their people.

Those organizations that had a crisis communication plan were able to inform everyone of what was happening, what to do, when to do it, and reassure them they would all get through it.

Those organizations that had a continuity and recovery plan were ready to get back to work, to school, to serving their constituents as soon as it was safe to do so.

There will be unbudgeted costs and losses, but for those who had a plan; had trained with their plan; and used their plan, the costs and losses will be significantly smaller than they could have been and life will return to near normal within weeks, rather than years, if ever.

Thursday, August 25, 2011

Supply Chain: A Crisis Waiting To Happen

Did you ever consider your supply chain a “crisis waiting to happen?”

Do you have a supply chain vulnerability or risk assessment?
Do you have a crisis operations, communication and recovery plan for your supply chain?

Even if you answered “yes” to the first question, I would be shocked out of my socks if very many of you had an assessment of what could go wrong, and even more surprised if very many of your companies had an integrated operations, communication and recovery crisis plan for your supply chain.
Professor Alan Braithwaite at Cranfield University and LCP Consulting has written a very good White Paper, published by MissionMode Solutions, focusing on “overcoming operational glitches” – his tongue-in-cheek term for crises – in the supply chain.  And he uses the term “supply chain” in the broadest possible way.

Professor Braithwaite made his point using Bear Stearns as an example.  He pointed out they bought “bad” inventory in the form of worthless mortgage securities with no possibility of the supplier making good on them.
Even with the most basic concept of supply chains, manufacturers have dramatically increased their risk of supply chain “glitches” just to save a few dollars up front.  When you bought parts from a supplier a state away, there were certain risks, but when you began buying those parts from the other side of the globe, the RISKS increased substantially.

Six years ago I was flying home from a client trip and my seatmate was visibly agitated and after we introduced ourselves and she found out I was a crisis consultant, she told me about her crisis.
She was on her way to the corporate headquarters of a major retailer that operates some of the largest and most successful outdoor stores in the United States. 

She had to tell the CEO that the entire stock of the next season’s outdoor wear had been swept off container loading docks in Southeast Asia, and many of the factories where the apparel had been made had also been washed away.  It was millions of dollars of inventory that would never reach their stores.

Of course, that paled in comparison to the more than 230,000 people who were swept away by the same tsunami.
Every business, of every size, has some kind of inventory which comes from a supply source, whether its auto parts or office supplies, electronic components or cleaning supplies.

When you review your crisis plans, next time, don’t forget the supply chain possibilities.

Monday, August 15, 2011

Smoldering Computer Crises Erupt

Remember, we say two-thirds of all crises, on average over the past ten years, are preventable. And how many businesses or organizations are the victims of a computer generated crisis, almost daily now?

Our "down under" Crisis guy, Tony Jacques, tells the story of a Melbourne-based IT company that was the initial victim of a hacker. And the hack of the IT company knocked out the websites of 4,800 mostly small and medium size companies. The IT website host was forced out of business, and many of their small business customers may not survive.

That was purposeful, and might have been prevented or the damage minimized with better planning and crisis prevention.

Not too many years ago, we had a much bigger "host" company with several thousand customers, and a reasonable back-up plan for hurricane damage.  But a so-called "perfect storm" knocked the host site out of service for several days and caused significant damage to hundreds if not thousands of their business website customers.  The host company survived, and did the "right thing" by their customers, but not without considerable cost to the host and many of the businesses that depended on their company websites.

And if those examples were not bad enough, this past weekend, the  Hacktivist group Anonymous launched an attack on the San Francisco Bay Area Rapid Transit System. BART was targeted after the transit system blocked mobile telephone service in part of its service area in an effort to thwart an anticipated protest and demonstration against BART.

I can go on and on with examples, but we still see so many business and organization decision makers that think the only kinds of crises their organizations face are fires, explosions and natural disasters. We are living in a world where computers have become such an important tool in how we do business, and at the same time one of the most powerful tools that can be used to disrupt business or even destroy a business or organization.

When you assess your most likely risks -- crisis origins -- make sure you put computers and the Internet near the top of your list.

Friday, August 5, 2011

Finally, Someone's Doing It Right

It may have taken the US Department of Agriculture Food Safety and Inspection Service two weeks to take action, but once Cargill Meat Solutions Corporation was identified as a likely source of Salmonella Heidelberg contaminated ground turkey, they wasted no time initiating a voluntary recall of nearly 36-million pounds of fresh and frozen ground turkey products.

One person has died and at least 76 others in 26-states have been sickened by contaminated turkey.

Cargill immediately posted information about the recall on its website www.cargill.com and linked readers to its news release page for the latest information http://www.cargill.com/news-center/news-releases/2011/NA3047807.jsp .

Cargill operates four turkey processing plants, but  has only shut down operations at the Springdale, Arkansas plant. Cargill President Steve Willardsen is quoted on the company's website announcing, "...given our concern for what has happened, and our desire to do what is right for our consumers and customers, we are voluntarily removing our ground turkey products from the market place."

Not only has Cargill used its website to provide information to consumers, but it is working with its grocery store and supermarket chain customers to inform the public about the potential risk and offering full refunds for any of their ground turkey products packaged between Feb. 20, 2011 and Aug. 2, 2011.

To top off all of those actions, President Willardsen added his own personal apology, "It is regrettable that people may have become ill from eating one of our ground turkey products and, for anyone who did, we are truly sorry."

Wednesday, August 3, 2011

Another Reason To Have A Crisis Plan

A relatively new San Fransisco  business that brokers rental properties....helping travelers find homes to rent, temporarily, or helping home owners to find temporary renters....found out the hard way why they should have had a crisis plan.

Airbnb is the company that helped a San Fransisco woman find a temporary renter for her home.

When the woman returned from her trip, she found her temporary renter gone, along with her camera, laptop computer, iPod and her birth certificate and social security card.  They had been locked in a closet, but the closet was broken into.

The woman took her awful experience on-line, and it became a national story.

The woman talked to Airbnb several times, before she went public with her experience.

Company CEO Brian Chesky ended up doing the "right thing" for his client and his business, but not before significant negative publicity did it's damage.

Eventually he issued an "unconditional apology," and in a company blog, he wrote about the woman, "we let her down, and for that we are very sorry."

He added, "We should have responded faster, communicated more sensitively, and taken more decisive action to make sure she felt safe and secure."

". . . we weren't prepared for the crisis and we dropped the ball.  Now," Chesky said, "we're dealing with the consequences."

San Francisco Police have a suspect in custody, and Chesky now insures his clients for up to $50,000 in damages and losses.

It doesn't matter how small or big your organization may be, or whether its for profit or a non-profit, it should have a crisis plan, and key members of the organization should be trained in using the plan.