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Brands: How Does Your 3PL Prepare for the Worst?

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Hurricanes happen. So do earthquakes, blackouts, brownouts, wildfires, floods, pandemics, superstorms, tornadoes, geopolitical events, road closures, strikes, tariffs, retaliatory tariffs, blizzards, derechos and countless other events that can wreak havoc on a brand’s supply chain. 

Zeroing in on the fulfillment link of that chain, your 3PL’s business continuity plan can make or break your defense against the unexpected.

Here’s what to look for.

An Actual Business Continuity Plan

This is a physical document that a 3PL should have. Typically, the CEO owns it. The Business Continuity Plan outlines business disruption risk mitigation that addresses the loss of strategic, critical, and non-critical staff as well as the loss of on-site utilities (i.e., power, water). It covers what the 3PL will do if a facility or location is rendered inaccessible, if suppliers are offline and what happens when transport services are inoperable. 

Additionally, the Business Continuity Plan details procedures and protocols for what are called “global disruptive events” such as snow storms, floods and hurricanes and “local events” such as fire, power outages and damage from localized storms. 

At Capacity, we have specific levels of disruption tolerance. Disruption tolerance is industry speak for the minutes, hours, days or weeks a particular business function is allowed to effectively be offline before we initiate specific protocols. The more critical the business function, the smaller the level of disruption tolerance. This applies to things like data processing, receiving, warehousing, order pick and pack, order shipment, communication (client services), assembly and administration. We also test our Business Continuity Plan on an annual basis, executing theoretical situations and measuring our response speed and accuracy. 

"In the past few years major events have disrupted supply chains, causing our clients to look for opportunities to ensure their business can continue to operate without disruption. We have listened to these concerns and have developed plans with numerous clients to hedge against the unpredictable.”

Kevin Bernick
VP of Business Development

Strategic Inventory Management 

When a major snowstorm hits New Jersey and all of your inventory is in that state, you understandably might get nervous. Ecommerce orders don’t care if there’s 16” of snow on the ground preventing pick and pack staff from getting to work, mucking up carrier routes and ultimately slowing fulfillment. 

But working with a 3PL that plans ahead for events like these can make all the difference. 

One potential solution is to keep inventory at more than one location to create “safety stock.” This is a delicate balance though. Safety stock obviously creates additional cost. As a stock gets depleted, brands may have to ship goods out of inventory at one location to inventory at another. This is called internal transfer. And when replenishment is required, a brand needs to do so at a smaller run, which likely yields a higher price. 

But weighing the extra costs of safety stock against the negative brand impact delays might cause is a worthwhile exercise. The right 3PL can help you figure that out. We work with brands to analyze SKUs, sales and order profiles to develop the right inventory management strategy that prioritizes preserving business continuity.

Want to See Our Business Continuity Plan?

Contact us. We’re happy to share it with brands that focus on planning for the unexpected as much as we do.