After a hard day’s work, the last few employees gather their belongings and shuffle weary bodies out to the parking lot. You double-check everything, and convince yourself that all is in order before turning off the lights and locking the door on your way out.
A few hours later, you lay in bed dreaming and are suddenly awakened by a call you hope that you never get. A distant voice tells you that your company is burning to the ground.
What’s next?
Wake-up Call
A fire is like a rite of passage for pallet companies. It is practically unheard of to be in the business longer than 25 years without witnessing some sort of disaster, typically fires. Hurricanes, floods, and other weather-related disruption of high severity can also have an apocalyptic effect on your business. There’s a reason Pallet Enterprise occasionally writes articles about the resilience of small companies that succeed after unforeseen devastation. A lot of companies don’t pull through.
Business continuity planning enables staff to establish objectives that keep businesses functioning, protects assets, and carefully monitors potential risks. Furthermore, preventative measures can be established where appropriate, and managers assume control of business interruptions, thus dampening the repercussions of disaster scenarios.
There are two kinds of survivors in a disaster scenario: those that get lucky, and those that prepare. In some cases, they fair just as well, but getting “lucky” doesn’t have to be a typical crap-shoot. Proprietors and gamblers are birds of a feather, and they play to win.
Delon Mortimer, owner of the Mortimer Pallet Co. in Smithfield, Utah never had any intention of setting up a business continuity plan for his small venture. He’s been working in the pallet industry for a decade with nothing more than a few machines, an old barn, and a reliable crew of seven. His pallet facility went up in smoke on Nov. 16.
“The building we were in was pretty old,” said Delon as he recounted the events after the fire. “It wasn’t worth a whole lot; it might have been around $250-300,000.” Delon also lost nearly $70,000 worth of forklifts, saws, and dismantlers.
“We never missed a beat, we just worked outside,” Delon explained. However, he never truly planned for such extreme contingencies. He had a house on the same property from which to draw power, and also owned another building that renters occupied. He simply had his new equipment shipped to his other property.
“The whole key for me was that I wasn’t real big. I’m a smaller operation, and we were set up to where all we had to do was just go back to work outside,” maintained Delon. “We didn’t have any insurance, either.”
“Now if I had a fire in the building I’m in right now, that might put me down,” he posited thoughtfully.
Delon is currently in the process of safeguarding his business against unnecessary losses from fires or other natural disasters in the future. “I tell everybody if I had another fire, I’d call it quits,” he laughed. “We’ve got a sprinkler system coming in. If there’s a fire, the sprinkler system will shut it down, so hopefully the fire won’t cause any damage.” Additionally, Delon rearranged his outdoor pallet stock. “I don’t put all my pallets in one place; I’ve got them all scattered around.” With his new arrangement, Delon hopes to forego the unlikely but costly possibility of arson.
Make the Dice Work for You
In order for casinos to make money on craps, they use giant tub-like bins to reduce the player’s chances of altering the outcomes with complex throwing techniques. Even something as subtle as a thrower’s grip can drastically change the odds, and subsequently the outcome in games of risk. Similarly, it is just as important for proprietors to take as much control of disaster preparation and management as possible. In craps, it’s referred to as the “lock grip.” In business, it’s just common sense.
According to READY.gov, Homeland Security’s disaster preparedness and business continuity Web site, the most important facet of business continuity is two-way communication between employers and employees. Delon found that this is also the case with businesses and customers, as well as businesses and equipment supply companies.
In Virginia, we call people like Delon “good ole boys.” You can hear it in his voice when he talks; he’s a real amicable, decent fellow. In the end, his favorable disposition probably kept the business afloat. Customers and suppliers recognize these tendencies, and thereby forge trusting, reciprocal relationships.
“My customers were really good,” Delon admitted. “I mean people were giving me pallets, like here don’t pay for this load. It’s kind of a unique deal with everyone pulling for me. I had other pallet friends in Salt Lake that I bought pallets from to supply some of my orders, so I just bought them retail. I didn’t make any money but I didn’t lose any customers. I found ways to make it work.”
Delon’s good relationship with equipment suppliers kept his business operating, too. “I even had a Heister forklift brought to me [from Arnold Machinery] the very next day,” Delon added. “He let me use it for a month before I even needed to buy it.”
Another integral part of business continuity is acquiring supplies, so you and your employees can get back to work quickly. Most importantly, Ken Sherman, president and CEO of Continuity Solutions, Inc. suggests making sure companies have data and extra equipment stored in a secure, offsite location. “We didn’t lose all the repair boards that we have separated out, so we were able to operate the next day,” said Delon. Even though he didn’t intentionally separate his stock, the undamaged material was available after the fire to keep him in business.
“I went and got an air compressor and ran a couple of nail guns,” said Delon. “I only missed one order.” His small crew of seven and he were working as hard as ever to recoup nearly two months of limited production. By Jan. 5, Mortimer Pallet Co. was back to producing nearly 6,000 pallets a week.
Controlled Rolls
Dice throwers also manipulate outcomes by using tactics like blanket rolls and rhythm rolling to turn probability to their favor. Savvy businesspeople act similarly, since every investment is essentially a gamble, and they’re playing for keeps.
In blanket rolls, a player modifies the surface where the dice will actually be rolled, by using cloth or blankets, hence the name. By doing so the player gains an advantage by reducing the amount of spins dice will make once they land. Rhythm rolling is improving a player’s odds by combining a lock grip with dice setting, or strategically picking up the dice so that the numbers facing up will determine the outcome of the roll. Once a player gets into a rhythm, he or she can consistently achieve desired results.
One of the champions of business continuity in the pallet industry is Gus Gutierrez, chief executive officer of Pallet Consultants, Inc. Bill Kelly, the Vice President of Sales jokingly refers to him as the Chief Disaster Operator. After years of dealing with hurricanes, Gus had a business continuity plan ready and waiting. Thanks to his expertise through trial by fire, Gus knows the dice will fall according to plan.
On March 3, Pallet Consultant’s Pompano Beach, Fla. was engulfed by flames. With losses well into the millions and the 106,000 sq. foot warehouse facility damaged beyond recognition, Gus never flinched.
“We had the right people in place,” Gus said. We had a disaster team trained from the hurricane that came in and moved our corporate headquarters right across the street.”
Pallet Consultants had 10,000 sq. ft. of temporary tents installed on their property to shelter its employees and equipment. “We’ve got phone lines, we’ve got generators. Everything’s portable,” Bill said. “We’re ready to go. It looks like a combination between a tent city and a war zone.”
The fire took place on a Friday, and according to Bill, everything was ordered and en route by Saturday evening. “We shipped in nails, guns, and everything else within 24 hours from all our other facilities,” he said. Within days, Pallet Consultants had additional Smart Products 64" dismantlers and power feed trim saws up and running. He also made sure to get his hands on Trace Equipment’s 14" chop saw, 20hp notch machine, and a 10’ round accumulator table.
Caterpillar 220kw and 125 kw diesel generators, capable of handling their productions needs, are also ready to roll in case of other disasters. He also has gas-powered dismantlers at his disposal, as well as a Marshall and Henderson 48 portable Heat Treating System. Nissan restocked their forklift armada within 72 hours. And that’s just for starters.
Pallet Consultants is managing its inventory with Palm Pilots, which are also helpful in monitoring piece-rate wage accreditation until its new facility is finished. Gus is estimating a thirteen month time table for its completion, but he expects all of his customer’s orders to be filled in the meantime.
The Pompano Beach facility usually produces 34,000 pallets per week, but now it’s down to roughly 23,000 per week. Gus expects his facility to increase production by another 10% of the typical weekly average upon completion.
“I guess it’s the combination of being organized and having multiple facilities that are used to doing this,” Bill said of their plan. “We’re getting really good at it, unfortunately, but we’d like to stop practicing.”
The market for business continuity consultants has increased dramatically in light of the recent natural disasters and terrorist strikes. Ken suggests that managers interested in business continuity plans may want to search the Internet to find a template that suits their needs. If more specialized attention is required, proprietors can contact a consultant to customize their plans.
Pallet Consultant’s basic disaster recovery outline includes providing top management guidelines, identifying serious risks, prioritizing operations, assigning a disaster team and taking inventory. From there, it’s just a matter of documentation, training, testing, review and implementation.
Smaller operations may not need to go to the extremes of Pallet Consultants, but just having a general business continuity outline may make all the difference between getting back on the job and searching for a new one. Like Vegas, nature is hardest on the novices. Don’t leave 7’s and 11’s up to dumb luck when you can take control.
