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					                 Workshop II:

             Disaster…and Survival
April 20, 1998      AICC Spring Meeting
             Disaster…and Survival

 Moderator
      – Ed McLean, Advance Packaging Inc.
 Panel
      – Scott Bittner, Hawkeye Corrugated
      – Greg Arvanigian, Arvco Container Corp.
      – John Petillo, Insurance Consulting
        Associates



April 20, 1998       AICC Spring Meeting
                 Recovery Planning

                    Scott Bittner,
                 Hawkeye Corrugated
April 20, 1998         AICC Spring Meeting
Developing a Recovery Plan
 50%    of the businesses that have lost
  their critical operation for 10 days or
  more never recover
 80% of the businesses that experienced
  a disaster without a contingency plan
  fail in 5 years or less




April 20, 1998   AICC Spring Meeting
                 Reasons to Create a
                   Recovery Plan
 To be able to react swiftly to a crisis and
  minimize the damage to the corporation
  and its employees
 Customers are requesting disaster
  recovery documentation from their
  suppliers
      – Advent of just-in-time manufacturing
        processes
      – With the continued emphasis of single
        sources
April 20, 1998         AICC Spring Meeting
             Reasons to Create a
             Recovery Plan (cont)
 To   protect the long term health of your
    organization
      – Two days and we begin to lose orders, four
        days and we begin to lose customers
 Reduces the severity of a disaster
 Reduces the potential of a disaster




April 20, 1998       AICC Spring Meeting
  Plan Development Process
 Plan Initiation
 Business/Risk Evaluation
 Plan Development
 Training and Testing




April 20, 1998   AICC Spring Meeting
                 Plan Initiation
 Senior management and ownership
  commitment
 Develop the planning team
 Establish the scope of the project
 Create a timeline




April 20, 1998       AICC Spring Meeting
     Business Evaluation
           Critical
Internal Business Operations
 Communication
      – Fax
      – Telephone
      – EDI
      – Internet
      – Information dissemination (media, vendors,
        employees, customers)
      – Cellular System
      – Directories
April 20, 1998       AICC Spring Meeting
      Business Evaluation
            Critical
Internal Operations, Processes,
          and Systems
 Computer           (hardware-software)
     – Hardware main operating system
           - Terminals   - Cables
           - Printers    - Connectors
     – Software operating systems
           - Back-ups
           - Off site storage
           - Internal storage
 April 20, 1998             AICC Spring Meeting
      Business Evaluation
            Critical
Internal Operations, Processes,
          and Systems
  File           Documentation
       – Production masters (blueprints)
       – Cutting die specifications
       – Printing dies specifications
       – Printing specifications…electronically
         stored, laser disk, paper copy

 April 20, 1998            AICC Spring Meeting
      Business Evaluation
            Critical
Internal Operations, Processes,
           Systems
  Facilities
       – Hot site
             - Number of rooms required (war room,
               operations room, sales room)
       – Access
       – Manufacturing site (docks, size, utilities)


 April 20, 1998            AICC Spring Meeting
      Business Evaluation
            Critical
Internal Operations, Processes,
         Systems (cont)
  Facilities     (cont)
       – Warehouse site
       – Office supplies
       – Office equipment



 April 20, 1998        AICC Spring Meeting
      Business Evaluation
            Critical
Internal Operations, Processes,
         Systems (cont)
  Equipment
       – Manufacturing equipment
       – Cutting dies
       – Plates…box certs.
       – Manufacturing Supplies
       – Maintenance Supplies
       – Schematics (electrical, mechanical)
 April 20, 1998        AICC Spring Meeting
      Business Evaluation
            Critical
Internal Operations, Processes,
         Systems (cont)
  Processes
       – Order Entry
       – Payables/Receivables
       – Payroll
       – Estimating
       – Contractual Obligations

 April 20, 1998       AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
           Systems
  Vendors
       – Paper
       – Finished Goods
       – Inks
       – Specialties - foam, plastics, labels
       – Glue, tape, stitching wire
       – Strapping
 April 20, 1998         AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
         Systems (cont)
  Vendors        (cont)
       – Maintenance Supplies
       – Forms - especially checks
       – Waste/Scrap Paper…mill or broker
       – Parcel Delivery - Fed-Ex, UPS, U.S. Mail



 April 20, 1998        AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
         Systems (cont)
  Customers
       – Packaging Consumers
       – Primary Prospects
       – Fulfillment Customers
  Financial      Entities
       – Banks
       – Leasing Companies
 April 20, 1998        AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
         Systems (cont)
  Utilities
       – Gas
       – Electric
       – Water
  Transportation
       – Inbound Material Carrier
       – Outbound Material Carrier
 April 20, 1998       AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
         Systems (cont)
  Transportation      (cont)
       – Leasing Company
       – City or local cartage
       – Contract Carrier(s)
       – LTL Carrier(s)
       – To and from the plant

 April 20, 1998       AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
         Systems (cont)
  Off        site Warehousing
       – Finished Goods Warehousing
       – Raw Material Warehousing




 April 20, 1998         AICC Spring Meeting
     Business Evaluation
            Critical
External Operations, Processes,
         Systems (cont)
  Services
       – Temporary Employment Services
       – Sub-assembly or work shops
       – Consultants - OSHA, EPA, DOT
       – Attorney
       – Insurance Agent(s)
       – CPA
 April 20, 1998      AICC Spring Meeting
                 Identify Risks
 NaturalDisasters
 Personnel/Human Disasters
 Data/Technical Disasters
 Business Disasters




April 20, 1998      AICC Spring Meeting
   Types of Crises that have been
     Experienced by Business
           Organizations
- Adverse Governmental Action                           - Computer Damage
- Competitive Misinformation                            - Computer Viruses
- Death of a Key Executive                              - Information Leaks
- Death of a Key Customer                               - Leveraged Buyouts
- Equipment Malfunctions                                - Labor Problems
- Quotes (in & out of context)                          - Unethical Behavior
- Grand-jury Investigations                             - Whistleblowers
- Hazardous Material Spills                             - Landfill Sites
Sources: Mitroff and Pearson, Crisis Management, Jossey-Bass Publishers, 1993
   Castillo, J.E., Holmes Murphy & Associates
      April 20, 1998              AICC Spring Meeting
   Types of Crises that have been
     Experienced by Business
       Organizations (cont)
- Accidents (major)               - AIDS                   - Asbestos
- Bad Debt                        - Bankruptcy             - Foreclosure
- Chemical Spills                 - Lawsuits               - Takeovers
- Chemical Abuse                  - Lying                  - Vandalism
- Discrimination                  - Mergers                - Weather
- Embezzlement                    - Fire                   - Wind
- Water (lack of)                 - Rumors                 - Sabotage
- Contamination                   - Strikes                - OSHA
Sources: Mitroff and Pearson, Crisis Management, Jossey-Bass Publishers, 1993
   Castillo, J.E., Holmes Murphy & Associates
      April 20, 1998              AICC Spring Meeting
      Potential Risk Evaluation
 Risk           Evaluation Form
      – Evaluation by multiple staff members
 Severity          of Risk
      – Numeric values
 Onset           of disaster
      – Speed of occurrence




April 20, 1998            AICC Spring Meeting
       Business Impact Analysis
Identify           Human Property Business Internal      Internal
  Risk Probability Impact Impact Impact Resources       Resources Total Rank

         High 10 High Impact 10               Weak Resources 5
         Low 1 Low Impact 1                   Strong Resources 1




   April 20, 1998             AICC Spring Meeting
                 Plan Development
 Establishplan format
 Decide on plan media
      – Computer (format)
             Hardcopy

             Storage

 Possession
      – Who and where



April 20, 1998           AICC Spring Meeting
                 Recovery Teams
 Assign  a Recovery Administrator
 Establish team leaders
 Create the required teams




April 20, 1998       AICC Spring Meeting
          First Page of Recovery
                 Document
- Personnel     - Insurance Carrier
- Hot Site(s) - Hotel(s)       - Home(s)
- Alternative Business Locations
            - Telephone numbers
            - Telephone numbers of a person most likely
              able to contact (not immediate family)
            - Address
            - E-mails



April 20, 1998            AICC Spring Meeting
    Second Page of Recovery
          Document
 Evaluationof the disaster
 ONLY Critical Operations, Processes,
  Systems
      – Personnel
      – Critical Operations
      – Critical Processes
      – Critical Equipment and Facilities



April 20, 1998        AICC Spring Meeting
    Second Page of Recovery
        Document (cont)
 Prioritize
      – Human security and safety issues
      – Communication
      – Systems and Processes
      – Production




April 20, 1998       AICC Spring Meeting
       Divide the Plan by Topic
 Communication
      – Numbers for the prearranged telephone
        transfer
      – Numbers for prearranged fax buffer
      – Equipment Requirements --phones, faxes
      – Dissemination of Information
      – Spokesperson (employees, media,
        government agencies)
      – Customers
      – Vendors
April 20, 1998      AICC Spring Meeting
                         Facilities
 Hot            Site
      – Requirements for temporary manufacturing
      – Requirements for temporary warehousing
      – Requirements for temporary office
        (portables)
      – Utility needs
             Electric- voltage, amperage, volume
             Water - volume, wastewater treatment

             Gas - volume

             Portables - generators, lighting, heaters, etc.

April 20, 1998              AICC Spring Meeting
                 Facilities (cont)
 Security(new site, old site)
 Construction Contractors
      – Requirements for a new or rebuilt
        manufacturing site




April 20, 1998        AICC Spring Meeting
                   Logistics
 Transportation    for product
      – Inbound
      – Outbound
      – Finished
      – Raw
 Transportation    of employees
 Lodging (hotels, meals)
 Intra-facility transportation (warehouses,
  office, hot site)
April 20, 1998      AICC Spring Meeting
    Equipment Manufacturing
 Equipment  schematics and blueprints
 Equipment manufacturing listing
 Equipment brokers listing
 Specific and minimum equipment needs
 Staging
      – Warehousing
 Riggers, electricians, plumbers
 Material handling
      – Equipment, pallets, strapping
April 20, 1998        AICC Spring Meeting
                   Services
 Consultants
 Insurance      carriers
 Attorneys
 Sub-contractors




April 20, 1998       AICC Spring Meeting
                        Testing
 Reasons           for testing
      – Feasibility of the plan
      – Identify shortcomings and oversights
      – Allows for training
 Types          of testing
      – Checklist testing
      – Segment or spot testing
      – Random testing
      – Simulation testing

April 20, 1998           AICC Spring Meeting
  Divide the Plan By Disaster
 Fire
 Loss of key personnel
 Storms
 Computer/Data loss
 Labor stoppage
 Ect.




April 20, 1998   AICC Spring Meeting
                 Leadership Change

                   Greg Arvanigian,
                 Arvco Container Corp.
April 20, 1998          AICC Spring Meeting
                 Leadership Change
 Leadership        Transfer
      – Previous Management Style
      – Preparation for Transition
      – Employee Expectations & Responses
      – Options to Evaluate Continuing Business




April 20, 1998        AICC Spring Meeting
     Leadership Change (cont..)
 Transitional    Issues
      – Role of the New Leader
      – Insurance
      – Banking
      – Key Managers
      – Employees
      – Suppliers



April 20, 1998       AICC Spring Meeting
     Leadership Change (cont..)
 Transitional      Issues (cont..)
      – Customers
      – Family
      – Surprises




April 20, 1998        AICC Spring Meeting
     Leadership Change (cont..)
 Lessons        Learned




April 20, 1998       AICC Spring Meeting
     Leadership Change (cont..)
 Developing          a Contingency Plan
      – Family Member / Heir Apparent
      – Finding a Professional Manager
      – Insurance Protection
      – How Much is Shared
             Key Managers
             Others

      – When do you think Sell?


April 20, 1998           AICC Spring Meeting
                 Are you Adequately
                      Covered?
                     John Petillo,
                 Insurance Consulting
                      Associates
April 20, 1998         AICC Spring Meeting
                 Are you Adequately
                      Covered?
 Adequate          protection for a disaster
      – Natural
      – Mechanical
      – Other
 Proper          and Adequacy Coverage's
      – Property Insurance
      – Business Interruption Coverage
      – “Key Man” Insurance in the loss of the
        Owner

April 20, 1998          AICC Spring Meeting
             Disaster...and Survival
                   Summary
                      Ed McLean,
                 Advance Packaging Inc.
April 20, 1998          AICC Spring Meeting
             Disaster...and Survival
                   Summary
 Employees
      – Emergency Medical Training
      – Fire Responses
             Internal

             External

      – Where to go for Shelter & Headcount
      – Communication during the Event



April 20, 1998           AICC Spring Meeting
             Disaster...and Survival
               Summary (cont..)
 Employees            (cont..)
      – Management Responses
             Contacting the Insurance Agent(s)
             Contacting the Customers

             Responding to the News Media

             Security

             Damage Assessment




April 20, 1998             AICC Spring Meeting
             Disaster...and Survival
               Summary (cont..)
 Equipment
      – Resources for:
             TemporaryRepair
             Replacement

             Rental

      – Supplier contact list(s)
      – Power Generation
             Plant

             Office



April 20, 1998            AICC Spring Meeting
             Disaster...and Survival
               Summary (cont..)
 Equipment       (cont..)
      – Computer Backups
      – Suppliers’ Backup and Support




April 20, 1998       AICC Spring Meeting
             Disaster...and Survival
               Summary (cont..)
 Continuing      Operations
      – Remote Location(s)
      – Customer Notification
      – Competitor Agreement(s)
      – Insurance
      – Banking




April 20, 1998       AICC Spring Meeting
          Disaster…and Survival



             Questions and Answers?




April 20, 1998      AICC Spring Meeting

				
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