Co-Mac Company: Business Impact Analysis

Company Overview

Co-Mac is a relatively small company that provides specialized building hardware, such as fasteners, latches, construction locks, straps, supports, and more. The merchandise is imported from a variety of suppliers and distributors and is sold in a regional niche market. Being the first to arrive at this specialized market, Co-Mac managed to cement its position as a regional leader when it comes to specialized equipment (Welcome to Comac, 2016). However, the competition is rather fierce, and there are about 15 smaller companies that are waiting for Co-Mac to slip up so that they could swoop in and claim their customers.

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The company has about 130 employees. Co-Mac facilities are located in an industrial area. Their surroundings include small stores and other warehouses. Their facility is a large warehouse with some space given to offices. The storage hold is where most of the work is done. The packages are stored, shipped, and received here. Shipments leave and arrive daily, as the customers need their merchandise delivered to them as quickly as possible.

The customers call in periodically to order shipments. The company also runs a website, which is seeing a lot of popularity in the last three years. The number of sales conducted through the web equates to the number of direct sales. The total yearly income of the company equates to about 20 million dollars a year, half of which is made online.

Business Process Criticality

According to the Co-Mac warehouse manager, out of 13 processes listed above, only seven are mission-critical. The warehouse could operate, and the company could continue generating revenue, as long as these systems continue functioning.

Name of the process Mission criticality Commentary of the manager
Picking goods Critical If the fire damages the inventory, orders cannot be picked up.
Packing orders Critical Damaged goods cannot be packed.
Staging packages for shipping Critical If the orders cannot be picked or packed, they cannot be shipped to the customers
Tracking shipments en-route Critical If the orders cannot be picked or packed, they cannot be shipped to the customers
Updating inventory systems Critical The company needs to know what inventory it has undamaged, and what has been damaged in the fire. Damaged goods should be removed from stock as soon as possible
Managing damaged or missing goods Critical Normally a minor issue, managing damaged goods to free up space becomes paramount when dealing with the aftermath of a fire. Damaged goods should be removed from stock as soon as possible
Inputting inventory data Critical The company needs to possess information about what goods it can sell and what goods are damaged and need to be replaced or discarded.

As it is possible to see, in this scenario the key processes that have to be prioritized are those that allow the company to process and fulfill sales, as well as the processes that allow clearing out space and assessing which goods it can still sell and which are damaged and needs to get rid of. This scenario assumes that the IT portion stays relatively intact, as loss of both the wares and the means to process and monitor customer orders would likely damage the company beyond repair and place an overwhelming amount of challenges to be overcome.

Financial Impacts

Function Process Financial Impact
Customer service Addressing customer problems 3000$/day
Warehouse operations Packing goods
Shipping orders
Receiving inventory
2500$/day
11000$/day
4000$/day
Sales operations Conducting sales and generating new orders Delayed Impact

The table above presents data for the financial impact in the aftermath of a fire. The sales operations would not be impacted immediately, as the site would still be up and running. The customers would still be able to generate new orders, unaware of the situation that has transpired. Eventually, however, there will be an impact. The word will get out and cause some clients to cancel their orders or buy from your competitors.

However, it is not going to happen immediately. The head sales manager provided this data, but he was unable to make estimations as to how devastating the delayed impact would be, as the situation in this BIA report is largely hypothetical. The list includes increased customer service expenses, as many customers would no doubt call as soon as they hear about the disaster, to check on their orders and make certain that those would be delivered on time.

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Recovery Time Objectives

Recovery time Objective, also known as RTO, serves to identify the estimated time needed for a business to return to its minimum operational capacity, and full capacity as well. Knowing this is important for any business – if the RTO exceeds the maximum tolerable period of disruption (MTPD), then additional effort must be put into reducing the RTO so that when a disaster strikes the company would be able to recover without losing customers and revenue.

Right now, according to the warehouse manager, the recovery time for Co-Mac exceeds the MTPD. He stated that full recovery would be possible in time between one to three weeks, while the MTPD is only one week. The length of reparations would depend on how badly the fire damages the warehouse’s electrical grid, as replacing it is a lengthy process. Removing damaged goods and machinery, however, is a much less cumbersome task. It would not take more than a week to complete.

Recovery Point Objectives

The Recovery Point Objective stands for reaching the revenue rates for a point in time set before the incident. In other words, it identifies how much time is needed for the company to financially recover. These estimations are important for planning a long-term strategy since crucial incidents that severely disrupt the company could prevent its growth for many months. The recovery estimations also tend to be far less accurate, as many factors are hard to predict. These factors include client backlash and the extent to which the incident would go public.

The sales manager was cautious in his predictions regarding the recovery point objectives. He brought up the fact that the competitors would likely contribute to the news about the incident spreading to hamper Co – Mac’s recovery, and clients would likely become upset over the loss of goods. He estimated that it would take at least a year for the revenue to return to their pre-disaster rates and for the clients and competitors to forget about the incident. Still, the sales manager remarks that such events tend to leave a large stain on the company’s reputation, a stain that is not easy to wash out. He says that certain companies are forced to change names and start anew to avoid association with such failures.

Resources for Critical Tasks and Actions

To facilitate normal activity, the company would require a specific set of resources. To understand what they are one has to analyze the list of critical tasks and actions. The company would require a fresh and steady supply of goods to resume trade, wrapping materials to pack them, mechanisms and machinery to lift and transfer them, and computer hardware to monitor the shipments and manage the inventory. Additional resources would require cleaning utensils, lights, heating, ventilation, and other supplies necessary to restore the facility.

Resource Priorities

The priority resources would be those that help resume the tasks and processes critical to running the business, with the aesthetics and comforts considered secondary. Out of the list presented in the section above, the primary sources such as trade goods, packing materials, hardware, and machinery have the top priority. The additional resources such as cleaning utensils, heating, and wallpapers, while important to the working climate, are not necessary to operate the facility.

Conclusions and Recommendations

As the analysis and the company’s expert specialists have pointed out, the event of fire poses the greatest threat to the company’s business, more so than any other possible emergencies. To minimize the risks and damages in its aftermath, the company is required to have a solid backup plan. A list of emergency suppliers and restorators must be kept on hand, to save time looking for contractors to perform the repairs and removal of damaged goods.

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Extensive fire suppression systems are worth investing in, as fire damages pose more damage to construction hardware than moisture. Computer systems should have cloud backups of all the important documents and files, to make sure the site does not go down in the event of an emergency and that the critical information about customers and orders is not lost. Formulating a long-term strategy would ensure that the reputation of the company is not shattered forever. Having these backup plans would ensure that the company would be able to recover after the incident, instead of losing everything and going bankrupt.

References

Practical fire safety guidance for factories and storage premises. (2008). Web.

Rouse, M. (2016). Business Impact Analysis (BIA). Web.

Welcome to Comac. (2016). Web.

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StudyCorgi. (2021, January 2). Co-Mac Company: Business Impact Analysis. Retrieved from https://studycorgi.com/co-mac-company-business-impact-analysis/

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