Case Study: Business Continuity Planning
According to Tucker (2015), business continuity planning include those processes to identify and manage risk so that an organization can operate resiliently in the face of obstacles. This essay will examine the business continuity process for a fictional small business through the lens of three potential events that could happen in the business’ location. This business uses a combination of both manual manufacturing processes and cloud-based data management processes as part of its daily operations. At its conclusion, this essay will also recommend improving the business’ continuity of operations processes.
The Goal of Business Continuity Planning
Besides Tucker’s (2015) definition, Rezaei Soufi et al. (2019) note “[p]ractical experiences have shown that providing effective contingency plans to cope with disasters help organisations to keep their reputation, ensure the continuity of their processes, and to be resilient” (p. 779). Romig (2021) concurs: “The development of a strong BCP for any business venture should be established based on the identified business risks that can affect the possibility for the business to sustain its normal productivity levels” (p. 228). The obvious conclusion to draw from these three researchers (and others, such as Swanson et al. (2010)) is that business continuity planning should be a key component of an organization’s plans for staying a viable concern in the future.
Overview of the Small Business
Founded in 2015, EdCo Luthiers is a small guitar manufacturer in Los Angeles County, California who specializes in custom-made guitars for discerning players. While its primary mission is to make the best guitars possible, there are several critical processes that enable the success of its mission: sourcing raw materials, guitar construction, marketing its guitars, selling the guitars, and supporting the purchaser after the sale. Wood used in guitars comes from around the world with complicated supply chains (ZME Science, 2019). Additional elements of the guitar include the specialized glues, dyes, hardware components, and, of course, strings. Making the guitars themselves requires an array of skilled artisans known as luthiers and facilities to perform the work in.
Guitar players know EdCo Luthiers as a local Los Angeles company. Through its marketing efforts, the company seeks to broaden its reach to potential customers throughout the region and in the larger California market. It does this through internet-based marketing on Facebook and exhibiting at the National Association of Music Merchants (NAMM) annual trade show, billed as one of the largest trade shows focused on instruments in the world (Price, 2022).
EdCo Luthiers sells guitars directly to customers in a small showroom in its Los Angeles facility as well as directly over the internet through its website. It has plans to sell through independent music stores in the next two years (hence the importance of the NAMM show, which limits attendance to manufacturers and retailer organizations). Finally, the company supports its customers after the sale through its warranty program and parts department.
Potential Disruptions in Los Angeles, California
Swanson, et al. (2010) note that organizations should prepare for the full spectrum of potential events; however, that concept is vast and outside this essay. Therefore, this essay presents three potential disasters: earthquakes, wildfires, and active shooters.
Earthquakes
Earthquakes are a fact of life in California. The largest fault line in California, the San Andreas fault, runs through the County of Los Angeles according to the California Earthquake Authority (CEA) (n.d.). The CEA (n.d.) also says there are “over a hundred smaller active faults in the region that can cause damaging earthquakes” (para. 5). Researchers suggest there is almost a ten percent chance of a magnitude six earthquake occurring in the areas within the next ten years (Rollins & Avouac, 2019). Such earthquakes can cause significant damage in populated areas like Los Angeles (Michigan Technological University, 2021). Studies also show that nearly half of businesses went out of business four years after an earthquake (Li et al., 2020).
Wildfires
Wildfires are a normal part of living in California. According to the California Department of Forestry and Fire Protection (CAL FIRE) (2022), over 2,500 wildfires burned in 2021. As of May 2022, the state has already experienced over 2,000 wildfires (CAL FIRE, 2022). The five-year average is just over 1,500 wildfires per year according to CAL FIRE (2022). These numbers are in line with recent research showing the entire nation is at greater risk for wildfire damage due to home prices pushing people into wooded areas and climate change (Flavelle, 2022). The US Forest Service (n.d.) places Los Angeles County into the 56% percentile for risk.
Active Shooters
The Federal Bureau of Investigation (FBI) (2016) defines an active shooter as “an individual actively engaged in killing or attempting to kill people in a populated area” (para. 1). While rare, the number of active shooter incidents has increased since 2000 (FBI, n.d.). According to data from the FBI (n.d.), nearly half of such events occur at businesses.
How These Disruptions Might Affect EdCo Luthiers?
Both earthquakes and wildfires would have the same effect on EdCo Luthiers’ primary purpose: making and selling guitars. During earthquakes, it is likely the company’s facilities will sustain damages, making production and direct sales difficult. In the event an earthquake doesn’t directly affect the business’s facilities, it would likely affect employees’ homes. The same is true of wildfires: the fire could affect either the company or the employees’ homes. Research shows that employees are less likely to focus on work tasks during a disaster because of concerns about the health and safety of family and friends (Arbon et al., 2013).
Active shooter incidents create other challenges for EdCo Luthiers. Beyond the immediate deaths caused by the shooter, “[r]esearch also suggests that mass shooting survivors may be at greater risk for mental health difficulties compared with people who experience other types of trauma, such as natural disasters.” (Novotney, 2018, para. 7). These events will directly affect EdCo Luthiers from continuing to work.
What Are the Minimum Functions EdCo Luthiers Needs to Restore Quickly?
The safety of EdCo Luthiers’ employees is the most important factor in all three disruptions discussed. The company can replace equipment, facilities, and inventory. To focus on anything else first would be immoral. As noted previously, EdCo Luthiers uses cloud-based systems for its financial and back office functions, such as human resources (HR). Since these are easily accessible from the internet and a laptop, these services should be the first ones reinstated after EdCo Luthiers has addressed immediate safety concerns. With these services functional, EdCo Luthiers can support its employees and retrieve vital records necessary for obtaining government and insurance resources to survive the disasters.
Recommendations to Improve EdCo Luthiers’ Continuity Planning
Following Romig’s (2021) advice about long-term business continuity planning, EdCo Luthiers should follow a process known as a business impact assessment (BIA). The BIA allows EdCo Luthiers to characterize the elements of the company and their role in supporting the company’s purpose; this allows EdCo Luthiers to understand the consequences disruption will have on it (Swanson et al., 2010). The basic steps of conducting a BIA include first determining individual business processes and recovery criticality. Next, EdCo Luthiers would identify resource requirements to support those processes. Finally, the company would determine recovery priorities for those business functions (Swanson et al., 2010).
Another immediate item EdCo Luthiers can do is to create an Occupant Emergency Plan (OEP). According to Swanson et al. (2010), the “OEP outlines first-response procedures for occupants of a facility in the event of a threat or incident to the health and safety of personnel, the environment, or property” (p. 10). The General Services Administration (GSA) (2021) has a strategy book for developing an OEP that EdCo Luthiers can use as a template.
Conclusion
As a small business in southern California, EdCo Luthiers is not immune from potential disasters that could disrupt its operations. It is important for companies like EdCo Luthiers to understand those processes vital to their business and develop plans so that those processes can continue to operate in the face of obstacles. Companies can do this by developing a BIA. Beyond ensuring the safety of employees, EdCo Luthiers can use this BIA to reduce costly post-disaster expenditures and ensure it remains a manufacturer of high-quality guitars for generations of new players.
References
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CEA. (n.d.). CEA — California earthquake risk map and faults by county. California Earthquake Map — Fault Lines, Zones & Risks by County | CEA. Retrieved May 20, 2022, from https://www.earthquakeauthority.com/California-Earthquake-Risk/Faults-By-County#:~:text=The%20San%20Andreas%20fault%20system%20is%20to%20the%20west%2C%20the,through%20much%20of%20the%20state.
Federal Bureau of Investigation. (2016, June 9). Active shooter resources. FBI. Retrieved May 20, 2022, from https://www.fbi.gov/about/partnerships/office-of-partner-engagement/active-shooter-resources
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Flavelle, C. (2022, May 17). Here’s the first-ever map showing wildfire risk to American Homes. The Salt Lake Tribune. Retrieved May 20, 2022, from https://www.sltrib.com/news/environment/2022/05/17/heres-first-ever-map/
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Price, A. (2022, May 13). NAMM 2022: The ultimate survival guide. Audio Media International. Retrieved May 20, 2022, from https://audiomediainternational.com/namm-2022-the-ultimate-survival-guide/
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Romig, T. (2021). A collaborative approach to business continuity and organisational resilience when dealing with a major crisis, such as COVID-19. Journal of Airport Management, 15(3), 226–234.
Swanson, M., Bowen, P., Phillips, A. W., Gallup, D., & Lynes, D. (2010). Contingency planning guide for federal information systems. Special Publication 800 Series, 1–149. https://doi.org/10.6028/nist.sp.800-34r1
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