Disasters touch every sector of the industrial distribution industry every year, costing millions, destroying businesses and affecting the supply chain. Incorporating an emergency preparedness plan can greatly influence the outcome of a disaster, as can the methods undertaken to recover from one.
Fires, floods, earthquakes, hurricanes – the disasters that affect the distribution industry range in cause, type and cleanup. Two things that company executives seem to agree on is that they never saw it coming and it could have been worse. But according to Lucien Canton, a certified emergency manager and author of Emergency Management: Concepts and Strategies for Effective Programs, that shouldn’t be true.
“People say, ‘Oh, I never saw that coming,’ and what I tell people is that ‘You should have,’” Canton says. “Really, you should have. There’s very little that occurs that hasn’t before. And there’s very little that occurs that there isn’t some way of anticipating it.”
Business owners can’t anticipate exactly what will happen, he says, but if they live in a flood plain, chances are they will get flooded. If they live in earthquake country, they’re going to experience an earthquake. It may not happen this year or next, but the odds are that it will eventually happen.
Fires are one of the most common disaster problems that business owners have to deal with, Canton says. In 2012, fires caused nearly $3 billion worth of damage to non-residential structures in the U.S., according to the National Fire Protection Association.
BellSimons, a refrigeration and plumbing product distributor based in New England, almost saw its $1.4 million Palmer, MA, warehouse go up in flames on August 25.
“We weren’t prepared, I’ll tell you that,” says Richard Nelson, a BellSimons regional manager. “We didn’t have a disaster plan in place. We’re dealing with it, and it really wasn’t as bad as it could have been.”
The fire was caused by an arsonist, according to Nelson, who says the Palmer police and the Massachusetts fire marshal were investigating the crime.
The 86,000 square-foot warehouse was equipped with a security system and the crucial component for fire disaster prevention: a sprinkler system.
“We have security and an alarm that goes right to the Palmer fire department and a sprinkler system,” Nelson says. “And actually, the sprinkler system did its job and knocked the fire down very quickly.”
For BellSimons, the damage was small. The fire was confined, and the warehouse structure remained intact, although it needed repairs and cleaning for smoke damage. Some product was damaged by fire and some by the sprinklers, but due to the company branch structure, there was no delay in order processing.
“In the two days right after fire, we were able to divert a lot of shipments to other branches,” Nelson says. “As far as product near the fire, we’re just being cautious that we don’t have anything go out that could have been affected by the fire. It’s taken some extra effort on the part of making sure that only the quality product gets out.”
Nelson says that the company is planning to discuss the events and address how to handle fires and other types of disasters in the future.
One effective way to approach a disaster prevention and recovery plan is to look at how minor problems are solved on a day-to-day basis, Canton says.
“Emergency preparedness really has to be just part of how you do business,” he says. “If something goes wrong
with your business that day, how do you handle that? Why wouldn’t that work in a major disaster – or why would it work?”
The most valuable resource many business owners have already is their employee base, Canton says, and an easy first step is to involve those people in planning and in recovery efforts as a formal or informal crisis management team.
“Ask the question, ‘When I have a problem, who do I talk to?” he says. “Who’s my brain trust? Who are the crazy people I’d bring in to help me solve problems? If you look at those people as your crisis management team, then those same people, in the time of a disaster, are the people you’re going to rely on.”
Employees can contribute to recovery ideas and help with implementing processes, Canton says. They can help categorize the main pieces of the business that need to be protected and creatively generate ways to work around problem areas.
“Employees have to be part of the whole process,” Canton says. “Not necessarily every rank and file, but certainly listen to their ideas. People who work the lines are the ones who know the workarounds.”
One example Canton recalled was from the 70s or 80s, when White Star Linen, a laundry service, was looking at doing business with no water due to a flood that had shut down all the local pumping facilities. White Star had an employee who knew how to drive a tractor trailer, who was able to obtain a tanker truck. Another employee had access to a farm with a well on it, which they were able to pump water from, into the tanker truck. White Star never missed a day of delivery, Canton said.
But not all disasters allow for operations to get up and running right away, as in the cases of White Star and BellSimons.
In 2011, a Niagara Lubricants manufacturing plant in Buffalo, NY, burned to the ground, costing the company $8 million.
Vice President Leon Smith IV got a standard phone call from his warehouse alarm system company at 5:30 a.m., alerting him that there was a problem.
“I called my one employee who opened up for us every day,” Smith says. “He said, very quickly, ‘Leon, there’s a fire, I have to go.’ And hung up. And that is when my heart sank into my stomach.”
Flames spread from the first floor to the second, to the third, and on and on until the building was gone.
“We thought that building that we were in was bomb-proof,” Smith says. “It had four-by-four reinforced steel concrete pillars that went 24 feet into bedrock. It was a really, really solid building.”
Out of everything that happened that morning and in the days that followed, Smith says there was no one thing that was the most unexpected or the most difficult to deal with.
“It was just a constant uphill battle,” he says.
But there was one piece of advice that he heard and took: Don’t watch the fire burn.
“That was probably one of the biggest and most valuable pieces of advice that we were given,” he says. “Stop watching your plant burn, you can’t do anything. You’re not creating any value for yourself or your business at that point.”
Instead, Smith says he and two other executives started planning. His father, chairman of Niagara Lubricants, and Tom McLeod, president, went to the company’s attorney’s office to map out a strategy. Smith started making phone calls to customers, vendors and competitors, spreading the word and asking for help.
“The theory was, there’s a lot more sympathy when your building’s burning down than two weeks from that date,” Smith says. “So time was really of the essence to ask for help and support from everyone.”
The goal was to make sure customers were still receiving the products they needed.
“If the customer goes somewhere else, if they
get another product, it’s very hard to make that switch back to you,” Smith says.
As a result of the fire, Niagara Lubricants lost 40 percent of its customer base along with everything that was stored in the manufacturing plant.
One thing that the company did not lose, Smith says, was its data.
“We learned an extremely valuable lesson of offsite backup,” he says. “I hate to admit it, but before that event I was completely against having our files, our precious files, our precious customer information, formulations, just hanging out in a cloud somewhere. It just scared me. I liked it physically on site. I could not have been more mistaken at how much that can maximize your exposure to liability.”
Now, Niagara backs up its data offsite in addition to keeping backups on disk, which are put into a fire-proof safe daily. The company has invested in a new fire suppression system and created a committee for health and workplace safety.
And, its sales are still strong.
“Our sales are actually above pre-fire right now,” Smith says. “We’ve been able to come back and then some. We’ve been able to expand our product line.”
With other types of disasters, such as hurricanes, some of the fallout can be anticipated and arrangements can be made to mitigate both damage to property and effects on customers. Canton says that thinking creatively and looking for opportunities in unusual places can sometimes make or break a company.
“When you have something like a hurricane, you know it’s coming,” he says. “That’s a great time to pull your team together and say, ‘What can we look at? Is there anything we can do in advance to make things easier for customers?’ Those are the things that customers remember. ‘You anticipated this and you took care of me, and I didn’t have any problems because of that.’”
Hurricanes, earthquakes and many other types of disasters affect whole communities, and that’s something that business owners should pay close attention to, Canton says.
“Large disasters bring demographic shifts,” he says. “The classic study is in the Northridge [California] area. After the big earthquake [in 1994], a lot of the people who lived there, they said, ‘We’ve had enough!” They moved out of the area, which created a little housing vacuum.”
The neighborhood changed, bringing people who wanted different things from local businesses. Demographics, demand and the labor market all shifted due to one earthquake.
“In Napa right now, we’re already talking about an increase in construction jobs to respond to the earthquake,” Canton says. “The thing about recovery is it’s very, very complex. You just need to be aware of what’s going on around you and what the impacts are on things like your labor force and your customer base.”