When resources
run out

If your company lost one critical resource today, how long could operations continue?

Are we talking about months, weeks or days? Do you already know the answer, or is it your best guess?

The pandemic, the blockage of the Suez Canal, cyberattacks, wars and disruptions to international transport routes have shown how quickly a crisis far away can affect local business. The impact does not necessarily begin with a dramatic production stoppage. First, a delivery is delayed. Then the price rises. Soon a component is no longer available, transport capacity falls or employees cannot get to work as usual.

At what point would your company realise that the disruption had already begun?

Corporate resilience, preparedness and business continuity do not depend only on what is done during a crisis. It is just as important to recognise change early and to have the courage to act on it.

Once a critical resource has run out, few options remain. The essential questions must therefore be asked before the point of resource exhaustion.

How quickly would you notice that a crisis had begun?

If the availability of energy, fuel or an important raw material started to weaken, where would your first warning come from?

The information might come from the news, a supplier, a transport company or your employees. The change might first appear in delivery times, prices, cash flow or customer behaviour. The crucial question is whether the organisation notices the situation from these signals or only when the required resource is no longer available.

Who in your organisation monitors international events, supply chains and other changes that may affect the business? If the task has been assigned to a particular person or group, who receives their observations? And perhaps most importantly: is this information listened to?

Situational awareness has little value if it does not influence decisions. Does the person issuing a warning have access to those who can purchase materials, modify production or restrict operations? Are decisions made while the problem is still developing, or does the organisation wait for certainty until few options remain?

Have thresholds been defined for availability, price, delivery time or cash flow, beyond which operations must change?

Or does normal business continue until it can no longer continue?

Which resources are truly critical?

When critical resources are discussed, raw materials and production components are often the first things that come to mind. Yet operations may also depend on fuel, electricity, water, transport, spare parts, information systems, telecommunications or the ability of employees to travel.

Can your company operate if production materials are available but transport does not move? Could the absence of one small but difficult-to-replace component stop an otherwise functional production line?

How well do you know the supply chains behind these resources? Where do they originate, where are they manufactured and along which routes are they transported?

If you use two suppliers, are they genuinely independent? They may rely on the same raw-material source, port, transport route, subcontractor or information system.

What would stop first if one critical resource disappeared? How long would your inventories last, and what would happen after that?

Can you identify a dependency that you have never yet had to consider?

Can the solution be bought and stored?

Could your company hold more critical materials in reserve, and how long a disruption should those reserves cover?

The decision must take account of shelf life, safe storage facilities and possible regulatory permits. Storing fuels, chemicals and other hazardous substances may also require technical modifications and new safety arrangements.

Inventory also ties up capital. What does it cost to leave material unused for a long time? And what does it cost not to have that material when it is needed?

Not every critical resource can be stored. Does your company have substitute materials, alternative transport arrangements or different production methods? Have their effectiveness and safety been assessed before they are needed?

If original spare parts or materials are unavailable, does the organisation begin to improvise? Are maintenance tasks postponed, temporary solutions adopted or working methods changed in a hurry? Who assesses the risks of those decisions?

Will production continue at the expense of safety?

Could your company last 72 hours, three weeks or three months?

Preparedness can be examined across three time horizons. Each raises a different set of decisions.

What would happen during the first 72 hours? Who would establish situational awareness, bring the necessary people together and make decisions? Are responsibilities clear enough that they do not have to be assigned after the disruption has already begun?

Who would be informed first: employees, customers, suppliers, owners or authorities? What could you promise them at that point?

If the disruption lasted three weeks, it might no longer be possible to maintain every operation at its previous level. What would be protected, what would be slowed down and what would need to stop completely? Would operations be reduced all at once or gradually as the situation developed?

If the needs of every customer or function cannot be met, who decides the order of priority and on what grounds?

And what would your company look like after three months?

Would the current business model still be viable? Could products, services or production methods be changed? Could the company use substitute materials, serve different customers or redirect its capacity?

Or would the organisation try to preserve its old way of operating until it was finally too late to change?

Where is your critical point of resource exhaustion?

Companies can survive very serious crises. Some emerge stronger than they were at the beginning. What separates an organisation that acts in time from one that recognises the situation only after its options have run out?

Has your company defined how long operations can continue as critical resources become less available, and when operations must be slowed or stopped?

Is your crisis-management plan based on your current suppliers, systems and responsibilities, or on an organisation that no longer exists? Does management know which small shortages would stop employees’ work first?

Does your organisation have the courage to slow down before the crisis forces it to stop?

The next crisis may be impossible to predict. A company can still assess its resilience by considering in advance how a disruption would affect its own operations.