Tag: Contingency Plan Training

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!

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Contingency Planning For Lean Operations – Part I

Contingency Planning For Lean Operations – Part I

Lean operations are driven by effective planning and efficient execution of core activities to ensure optimal performance is achieved and sustained.  The very nature of lean requires extreme attention to detail through all phases of planning and execution.  Upstream operations simply cannot tolerate any disruptions in product supply or process flow without the risk of incurring significant downtime costs or other related losses.

Effective risk management methods, contingency plans, and loss prevention strategy are critical components of successful operations management in a lean operation.  Risk management and preventing disruptions is the subject of contingency planning and requires the participation of all team members.

Successful contingency planning assures the establishment of an effective communication strategy and identification of core activities and actions required.  Contingency plans may require alternative methods, processes, systems, sources, or services and must be verified, validated, and tested prior to implementation.

Understanding and assessing the potential risks to your operation is the basis for contingency planning with the objective to minimize or eliminate potential losses.

Inventory represents the most basic form of contingency planning.  Safety stock or buffer inventories are typically used to minimize the effects of equipment downtime or disruptions in the supply chain. 

The levels of inventory to maintain are dependent on a number factors including Lead Time, Value, Carrying Cost, Transit Time (Distance), Shelf Life, Minimum Order Quantities, Payment Terms, and Obsolescence.

Why is this relevant?

Material and Labour represent two key resources that may be influenced by external factors that are beyond the control of any company policy or practice.  Internally controlled or managed resources such facilities, equipment, and tooling are less susceptible to unknown elements.  For the purposes of this discussion, we will examine Labour in a little more detail.

The H1N1 virus, originally known as the Swine Flu, is the latest potential health pandemic since the outbreak of SARS only a few years ago.  The government has been struggling to organize mass immunization clinics and to engage the media to aid in the cause.  In the meantime, the potential impact of the H1N1 virus on your operation remains to be an unknown. 

Experts have commented to the media that the lessons from the SARS outbreak have still not been learned.  One would expect that past practices would have already been adopted into new best practices from our experiences with other similar events in our history.

Government agencies at all levels (Federal, Provincial, and local) have mismanaged the activities required to procure and distribute the vaccine, and failed to provide an effective communication and immunization strategy to ensure the risk to public health was minimized and the at the very least understood.

The lack of coordination and accountability for the success or failure of the communication strategy, procurement and distribution of the vaccine, and other related activities are strong indicators that the planning process did not consider the infrastructure requirements and relationships needed between levels of government.

The lack of an effective communication strategy introduced confusion and speculation in the media and the general public.  Mass education only seemed to become more aggressive as incidents of severe H1N1 complications and related deaths were reported in the media.

If this really was a pandemic event, many operations today would (and may still) be adversely affected due to direct or indirect (supply chain) labour shortages.  Do you have contingency plans in place to address this concern?

It could be argued that “if we are affected to this extent, then our customers will be as well.”  This is not necessarily true unless your customers and / or suppliers are located in the same immediate area or region of your business.

People travel all the time, whether they are commuting to work from out-of-town or traveling to or arriving from a foreign country on business.  The source of exposure is beyond your immediate control. 

What other elements can directly impact labour?  We will explore some of these in our next post.  In the meantime, keep your hands washed and remember to cough into your sleeve.

Until Next Time – STAY Lean!

Unexpected and Appreciated – Uncommon Courtesy:  This morning, a person cut into the drive through lane ahead of us – not realizing the gap in the line was there for thru traffic.  Recognizing the error in drive through etiquette and to make amends, we were pleasantly surprised by the “free” coffee at the pick up window.  Thank you ladies!