The Meriam-Webster Dictionary defines economy as “a system of interaction and exchange”, i.e. a supply and demand chain. The role players in this chain are notably suppliers and consumers, or service providers and clients, as individuals we find ourselves using this chain to help us balance get the most ‘bang for our back’ and it has seen competition in respective markets soar. From an individuals perspective it is simple – if there isn’t any of brand A at the price we are willing to pay, we simply purchase brand B.
However, if we look at certain business – to – business services this model becomes more complex. In these cases, a relationship (and reliance) is generally built between supplier and client. Whilst this doesn’t completely remove the competitive aspect of the market, it does create a situation where it is not as simple as buying ‘brand B’.
For example, if company ‘A’ tenders to supply equipment to business ‘B’ following for a large project and for a substantial period A renders its services without issue. One day, ‘A’ suddenly closes down and is no longer able to render services to ‘B’.
This creates issues in the following areas:
- The ability of B to operate – where a company outsources key aspects of its operations, it becomes reliant on the operation of the outsourced company (in this case ‘A’). Where ‘A’ is no longer able to operate ‘B’ may be forced to suspend or delay its operations – for a potentially long period so as to allow for the appointment of a new outsource company, the removal of equipment/ infrastructure and the implementation of new infrastructure.
- The operations of the suppliers of ‘A’ – unless ‘A’ is purely a service company, it will have suppliers who rely on it for, at the very least, some form of income and at best a central revenue stream. In the event that ‘A’ is no longer operational, it may see the supplier come under immense pressure or be forced to release employees due to operational requirements in order to stay afloat.
- Employment – the employees of ‘A’ rely on ‘A’ for their income, and it logically follows that when ‘A’ is suddenly no longer operational these peoples source of income is lost. If we consider that in many South African households the breadwinner supports an average of 2 other people we can see how the domino effect of ‘A’ no longer operating becomes much more serious. Aside from the employees ability to make ends meat, this also places employees under severe emotional and mental strength.
As we can see, each and every business is a cog in the clock that is the economy, and a clock cannot operate correctly if all of its cogs are not operating.
This brings Business Continuity Planning to the fore, and highlights its importance to businesses, as well as its part in economic and social stability.
Disasters may strike at any time and although BCP and DR are aimed towards the ability of the business to continue generating revenue, we can see from the above that its implications spread far further than the bottom line.
Published by Dean Black