Improving Business Process: Food Manufacturing

bcp case study vegetable grower

This case study has been provided by Inoni, a provider of essential business continuity consultancy and software for analysis, planning and measurement. Find out more about Inoni.

The client is a well-established family firm growing, packing and distributing a wide range of vegetables. Their main customers are the large supermarkets and cash and carry stores.  Over the last few years due to market demands, the business has introduced a high degree of mechanisation. This has involved considerable capital expenditure and reduction in the workforce. Produce is grown throughout the UK and “out of season” is imported from Spain.

Their challenges

The client’s insurers were concerned that the business was growing quickly and needed assurance that their exposure to business interruption was being managed. To evidence this, insurers required the client to produce a Business Continuity Plan (BCP). Inoni were called in by the brokers to assist.

Inoni’s review of the business highlighted the following issues:

  • All output was from one highly-mechanised production facility. Estimated reinstatement time was more than twelve months. In the event of large scale production outage, manual operation would not keep pace with demand.
  • Knowledge of processes and production equipment was retained in the head of one senior director.
  • Production was highly reliant on a control system, which was backed up by the system installers in the Midlands. IT support was outsourced.
  • The transport office was found to be a single point of failure for IT and logistics control
  • There was a concentration of risk in one customer – a major supermarket accounted for 50% of the clients turnover and were highly demanding.
  • High reliance on one product – carrots – accounted for 50% of revenue.
  • Supply chain was geographically spread in UK, but still exposed to the vagaries of the weather. Out of season, there was a reliance on overseas growers.
  • High dependency on utilities. There was no back-up generator.

The solutions

Continuity of the production facility – this was the number one issue.

It was crucial to establish a record of everything to do with the configuration of the production line which the senior director held in his head. Manuals and other records were created setting out production processes, equipment layout and all relevant technical specifications and drawings.

This allowed for a detailed maintenance programme to be devised in conjunction with the various equipment manufacturers and support engineers. Key spare parts and consumables were to be stored on site to minimise down time.

The next priority was to establish a range of Product Recovery strategies, in case production was impaired. There were spikes in demand, especially at Christmas, when the client brought in extra staff and rented additional warehouse space. This gave Inoni insight into what options were available if the worse-case scenario of a serious fire in the production hall occurred.

Inoni identified the following range of options:

  • Relocation to farms – where produce was still in the ground, the production processes would relocate to the individual farms. The requirements in terms of people, equipment and logistics were a point of discussion.
  • Buy in ready washed /packed – produce direct competitors were ruled out of this outsource strategy. Inoni did however identify a range of smaller companies who could fulfil sourcing, washing and bagging vegetables (especially carrots). The requisite quality specified by the supermarkets could be met.
  • Access to extra labour – The alternative production strategies would stretch the existing workforce, so labour agencies have been identified who could augment the client’s own staff.
  • Backup transport systems set up in main admin building – additional data backup routines have been established in conjunction with the client’s outsource IT company. An additional server has been brought in, which is housed in the main admin building, which has different electricity supply and internet feeds to the transport office.
  • Customer diversification – The client actively seeking to find additional customers and to identify additional revenues across the other customers.
  • Product diversification – The client is seeking to move away from their high dependence on carrots. This is a longer-term strategy which needs to be planned in conjunction with a review of the supply chain.

Valuable outcomes

Whereas before the senior director was a single point of knowledge and therefore failure, the client’s management team now have a much better handle on the production set -up.

The BCP project has highlighted wider business issues such as dependency on a single major supermarket and carrots as a product. The identification of the serious impact on the business in the event of production outage arising from such dependencies, has made the management team realise their vulnerabilities and galvanised them into addressing the issues as described above.

Key takeaways

  1. Functionality of production equipment needs to be understood and maintenance programmes established to ensure minimal breakdowns.
  2. The source of recovery strategies can sometimes be found in looking at how a business sets up for busy periods, such as Christmas. This can include identifying additional labour, storage and production sites.
  3. It’s useful to identify alternative producers of goods or services who are not considered as competitors. If they can be incorporated into business as usual, perhaps as part of a growth plan, there can be more confidence in them as part of DR Plans.

The right insurance

Representing correctly the right length of indemnity period along with the correct insurance gross profit is vital to any business interruption section of an insurance policy. Working with Kerry London we understand the challenges faced by businesses and can assist your business identify the correct term and insurable gross profit. A resilient Business Continuity Plan greatly assists identifying the required detail and is a powerful demonstration to an insurer of risk awareness.

 

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How resilient is your Business Continuity Plan?

We have formed an exclusive partnership with Business Continuity Planning (BCP) experts Inoni Ltd. To receive a complimentary health-check of your business continuity plan, worth over £500 – without risk or obligation – please visit our Business Continuity Health-check page.

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Take advantage of our exclusive partnership with leading Business Continuity experts Inoni, and receive up to £1,000 worth of Business Continuity consultancy and services. To learn more, visit www.kerrylondon.co.uk/bcp, or email us at bcp@kerrylondon.co.uk

Disclaimer

Whilst every attempt has been made by Kerry London Limited to ensure that the information contained within this document was correct and accurate at the time of publication, Kerry London Limited accepts no liability for decisions based solely or in part on the information contained herein. You are advised to seek appropriate professional advice before making any change to your Business Continuity Plans.
 
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