Contingency Planning For Lean Operations (II)

Contingency Planning For Lean Operations – Part II

Putting together a contingency plan can be quite challenging when you consider all the things that could go wrong at any given point in time.  Contingency plans should not only be restricted to “things gone wrong” and are not limited to operations or process specific events.  All aspects of an operation are prone to risk.  As such, contingency planning must be an enterprise wide activity.

Failing to understand and assess the risks that may impact your operation is a recipe for future failure.  If you fail to plan then plan to fail.  The same is true for contingency plans.  Effective risk management and contingency planning are critical to minimize or eliminate the effects of failure.

Natural disasters (like we’ve never seen before) continue to plague us without prediction.  Yet, we are able to respond immediately and effectively.  If you get hurt or injured, someone is there to help you simply by dialing 911.  Emergency units are ever present and available to respond.

Unfortunately the same is not necessarily true for business.  The recent turn in the economy caused financial markets to tumble and decimated corporations on every scale.  Millions of people are affected by the fallout.  The government “loans” were not crafted after the event.  Did contingency plans exist to even consider this level of change in the economy?

Although history may be the best predictor of future events, it is not exclusive or exhaustive to predicting unforeseen future events.  Even if history did provide a glimpse of potential future failures, we may simply choose to ignore the probability of recurrence – this isn’t the first time the financial markets have crashed, yet we can’t seem to determine or understand what key indicators existed that could have prevented this current situation.

Certainly new variables are introduced as technologies continue to evolve and become more integral in our operations.

In Part I of this series we suggested that contingency plans should be prepared to address potential labour challenges and more specifically availability.  Certainly, the recent concerns regarding the H1N1 virus have heightened attention with respect to labour shortages.

• Inclement Weather – Immediate effects of Snow Storm, Hurricane, Heavy Rain, Tornado.
  • Other considerations include:
    • Duration
    • Seasons
    • Cumulative Severity
    • Delayed Effects (flooding)
    • Property Damage.
• Accident / Injury:  Personal versus Workplace
  • Long Term
  • Short term
  • Considerations to reduce or minimize impact to operations:
    • Early Return To Work
    • Modified Duty
    • Restricted Duty
    • Reduced Hours
• Illness (Personal / Family / Extended Family)
  • Short Term
    • (Flu, Cold)
    • Emergency
  • Long Term
    • Surgical Care
    • Chronic Care
• Sudden Premature Death
• Parental Leave (Maternity Leave)
• Bereavement – Immediate Family, Out of Country
• Retirement / Attrition
• Training
  • Onsite vs Offsite
  • Duration
• Meetings – Department
  • Company Wide
  • On Site
  • Customer Site
• Quality Disruption
  • Containment Activity
    • Sorting
    • Rework
• Travel
• Vacation Allowance / Timing
  • Customer Driven
  • Company Mandated
  • Personal Choice
  • Season
  • Duration
    • New Hires – Zero Weeks
    • Senior Employees – Per “X” Years of Service
• Holidays
• Absenteeism (Culpable)
• Layoff and Recall
  • Short Term
  • Long Term
• Supply Chain Disruptions – Raw Material or Part Supply
• Planned Shutdown / Start Up Events – Holidays
• Leave of Absence – Short Term / Long Term
• Facilities
  • Loss of Utilities:  Water, Electricity
  • Fire, Suspended Services
  • Parking Availability
  • Locker Space
• Equipment – Breakdown / Malfunction (Major)
• Tooling – Breakdown  / Malfunction (Major)
• Skill Levels Required – Non-Skilled, Semi-Skilled, and Skilled Labour
•  Union – Strike
• Customer Decreases
  • Shutdown (Reduced Volume)
  • Slow Down (Reduced Volume)
  • Reduced Work Week (4 vs. 5 days)
  • Shutdown (Planned)
• Customer Increases:
  • Volume
  • Extended Work Days (Daily Overtime)
  • Extended Work Week (Saturday)

There are likely more areas of concern that may impact your labour pool, however, this does serve as a starting point.  Do all of the above elements require a contingency plan?  Not necessarily.  We still contend that it is good practice to document all potential concerns.  It is easier to add a note to document the reason for exclusion from the contingency plan by stating:

• The following elements were discussed during the preparation of this plan, however, specific contingency plans were not considered necessary at the time of review:
  • Training – Scheduled Activity
  • Culpable Absenteeism – Progressive Discipline Program
  • Add Elements to the List as applicable

This latter task may seem somewhat trivial, but consider who else may be reading the report.  Defining the scope of the contingency plan and adding a list of exclusions supported with reason(s) clarifies any ommissions from the core plan, will minimize the time required for review, and eliminates any assumptions regarding unintended ommisions.

Our next post will address the elements to be considered when developing a contingency plan.

Until Next Time – STAY Lean!