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Business continuity organization for a logistics platform

Consulting Risk management
Business Cases
Business continuity organization for a logistics platform

Amazon, DHL, UPS… Leading logistics companies are no strangers to major disasters at their logistics platforms. Whether faced with the risk of fire, severe weather or cyber-attack, logistics structures are a generally underestimated vulnerability within companies. In addition to prevention, it is essential to think about business continuity in the event of a disaster.

Our customer, a specialized distribution group for DIY, home improvement and construction products, wanted to carry out this analysis on its main logistics platform. Following a minor disaster that disrupted its flows for several days, the project had a dual objective:

  • Evaluate the group’s real exposure to a major disaster on this multi-brand platform, in particular by calculating direct and indirect operating losses.
  • Organize the business continuity plan in the event of a major disaster, which would lead to the unavailability of this platform until it could be rebuilt.

We supported our customer in this process, mapping all logistics flows, their contribution to sales, the interdependencies between the various logistics platforms, and developing an operating loss simulation model. We then mapped the risks and identified the main vulnerabilities using a business impact analysis approach. We built and detailed the relevant continuity strategies to be deployed in the event of a major disaster, specifying the resources to be deployed, the investment required and the impact on financial performance. Finally, we described the projects to be set up to prepare these solutions and maintain them over the long term.

In summary, the project enabled our customer to draw two major conclusions.

The first concerns the level of insured operating loss, which was largely underestimated. In terms of the logistics master plan, the platform studied also acts as a central warehouse for other group platforms, which would therefore also generate losses in the event of a disaster. At store level, although the platform’s supplies only represent a part of the offer, it has been shown that after a few weeks’ out-of-stock on these products, this would have an impact on the entire store offer.

The second lesson concerns continuity strategies. There is no single solution for ensuring a satisfactory level of continuity. It is therefore necessary to consider several strategies in parallel. The strategy of developing a temporary rental or service area can only be operational after several months. It is therefore necessary to organize a back-up on the Group’s other platforms, with limited capacities, and direct deliveries from suppliers, with a specific Supply Chain organization downstream to manage this complexity. These joint strategies have been organized and described in the BCP, in order to optimize the ratio between additional costs generated and losses avoided.

Key figures:

A 60,000 m² platform preparing over 4 million lines a year

6-month project to establish the BCP

More than €200 million reduction in potential losses in the event of a major disaster

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