Having a disaster plan in place is becoming key to business operations these days. A KPMG study found that 40 per cent of companies who did not invest in disaster preparedness planning and whichsuffer a major business disruption go out of business within two years.
Hurricane Katrina hit New Orleans on August 29 this year, causing significant human and property damage to the city and surrounding area. The city had to be evacuated due to flooding.
The city's food industry and transport infrastructure. New Orleans' shipping terminals and other facilities were damaged. The Mississippi River, the cheapest route for the shipping of many cropsand other commodities destined for overseas and domestic markets, was inaccessible in parts. Commodity supplies, especially sugar and coffee, were disrupted.
Food conveyor manufacturer Intralox was one of the many companies caught up in the disaster. The company's president and general manager, Edel Blanks, told FoodProductionDaily-USA that acombination of disaster planning, quick adjustments and employee initiative helped get the company get back to dealing with new orders by September 16.
On that date the company was able to send e-mails to 10,000 Intralox customers in the Americas telling them that it could now take new orders, one month ahead of the projected 15 October scheduledrecovery. The company established a disaster plan about five years ago and has updated it regularly, most recently days ahead of the hurricane.
However, Blanks said the plan is being adjusted after faults were found in its implementation.
"It worked in some ways," Blanks said. "Things did not all go according to plan."
A curfew imposed on the city meant access to the company's assembly site was blocked, something management had not expected to last so long. The assembly plant is located in Harahan. Although thecompany's site was spared, widespread damage in the area meant it was not able to return to normal operations.
The company was able to use its European operations in the Netherlands and the UK to fill in the gap in production and customer service. Australia, Brazil and Japan operations also filled in thegaps.
Intralox is the world's largest supplier of modular plastic conveyor belts. The company , which has 1,000 employees working from New Orleans, ships an average of 230 orders a day out of itsLouisiana headquarters. Many of the orders are shipped within four hours or the same day to customers who can lose thousands of dollars a day if there is a delay, he said.
Blanks said the company would probably set up another assembly site in the US, one that would take up the slack in production in case another disaster disables the Louisiana one.
Another glitch occurred in the selection of backup customer service facilities in Baton Rouge, about one hour north of New Orleans. However that site was also affected by the hurricane, andmanagement had to scramble quickly and relocate customer and data services in Charlotte, North Carolina.
Management set up their temporary headquarters in Huston, Texas.
"I would plan to put customer service in a different location -- outside the hurricane zone," Blanks said.
The company also did not plan properly for the breakdown in communications systems throughout the region. Employees were difficult to contact. Most did not know how to contact the company to findout where they were needed or what they were expected to do.
"Local decisions were taken which made things work in the end," he said. "People dealt with the kind of unexpected things that can happen. You have to count on the goodjudgment of people. A company's culture and how people feel about the company comes into play."
Blanks said the company will now set up a free call in number that all employees can call into to find out information, no matter where they are. The company set up a 1-800 number and an Internetblog site during the event. It also offered financial assistance and continued payroll through September.
He attributes the company's quick recovery to employee initiative. As there was no or little contact with management due to the communications breakdown, middle managers took decisions on theground, adjusting to the situation. Employees pitched in to help.
"Many had lost their homes yet they were working incredibly long hours to help our customers," he said. "It's hard not to be emotional about it."
Meanwhile, long range disaster planning by Elmer Candy also meant the private company stayed in the market without a loss of production, or customers. The company makes products such as HeavenlyHash and Gold Brick for seasonal occasions.
Rob Nelson, president and chief operating officer, said the family-owned company had decided to move 45 miles out of New Orleans in the 1970s over fears that just such an event could occur.
Not only that, the company invested in a bunker style building and warehouse facility that could withstand quite a lot of battering. There were also backup generators to keep the products at theright temperatures. The company carries a lot of inventory to meet the seasonal demand.
"We got hit but we didn't collapse," he told FoodProductionDaily-USA.com. "Our walls are very thick. We had $10 millions of chocolate inventory to protect."
He added: "I remember our contractors telling us at the time that we were spending too much money on building far beyond what we needed. It paid off in the end."
The company's 400 employees also adjusted to the situation to carry operations through the storm, following the written disaster plan. When the power went off for three days, the generators wereable to keep the warehouses cool enough. A supply of diesel fuel on the site meant the company was not dependent on supplies.
Back in 1970 the company deliberately built the buildings on the same electrical grid as the nearby hospital, so it became one of the first companies to get power once it was restored.
Since the company's major sugar producer was destroyed by the hurricane, the company had to switch to a more expensive source.
"We have a good relationship with our vendors to get things working right as soon as possible," he said. "We have kept going, but at a cost."
Nelson advises companies to have a written disaster plan that is communicated from management down to employees. The plan sets out responsibilities in case of disaster.