Fires, floods, tornadoes … a pandemic. You’ve heard of a company having a contingency plan right? Well, building an e-commerce business continuity plan is even more important. While the best time to develop one is before disaster strikes, the next best time is now.
While a contingency plan is often used to anticipate catastrophic consequences, a continuity plan outlines how a business will continue operations during an unplanned disruption in service, return to its daily operations as quickly as possible and mitigate customer convenience all while protecting precious resources.
This year, e-commerce businesses have fared well in a COVID-19 market, revealing it’s a vital link within the economy in crisis. However, it’s also proved that e-commerce business continuity planning is more important now than ever.
WHAT IS AN E-COMMERCE BUSINESS CONTINUITY PLAN?
In business continuity planning, a company creates systems of prevention and recovery to deal with potential threats such as a cyber attack. The plan outlines specific procedures and instructions to follow during such disasters and ensures that personnel and assets are protected and can function in the event of a disaster.
While business closures to local brick and mortar storefronts can sometimes be unavoidable, say, when a blizzard hits and shuts down the main street, online retailers are held accountable to consumers around the world.
They still expect their order to be delivered on time, and they can—if you’ve got a business continuity plan blueprint in place.
An e-commerce business continuity plan includes information about how every department and segment of your supply chain can maintain maximum operational efficiency during a crisis.
But before creating this plan, you first need to conduct a business impact analysis. A BIA identifies the effect that disruptions would have on various business aspects, such as slower delivery times, inventory and sales loss or increased delivery costs.
Furthermore, the analysis helps you determine at what point a crisis will begin impacting your finances and operations. While a 17-car pile-up may get cleared after several hours and have minimal impact on order fulfillment and shipping, a freak storm that knocks out power to a warehouse for multiple days or longer could result in order backlogs. In the latter case the BIA would refer you to the contingency plan in place for power outages.
Once you’ve completed your business impact analysis follow the below steps to creating your e-commerce business continuity plan.
DEVELOPING AN E-COMMERCE BUSINESS CONTINUITY PLAN
Step 1: List and categorize critical functions of your e-commerce business
Step 2: Create a business continuity working group
-Include multi-department staff identified as “critical”
Step 3: Make a draft of the plan
-Include concrete steps to avoid specific types of business disruptions and calculate the cost to implement the plan. You’ll also need to determine how much downtime each critical function can tolerate before operations begin to slow or cease.
Step 4: Present, get feedback, refine
-Once you’ve created a draft of the e-commerce business continuity plan, you’ll need to present it company-wide, get feedback and then use it to refine your plan.
Step 5: Take preventative action
-This may include having power such as generators and Internet backups in place. Part of this step includes active and regular training so employees become familiar with how to take action during an emergency.
Step 6: Review and revise
-Your business continuity plan should be updated every two to five years, reflecting any changes made to internal operations. It should also include any new external risks that have come up.
CRITICAL FUNCTIONS FOR OPERATIONS
Sales Platform Uptime: If you run an online store on your own website (not through large platforms like Shopify or Amazon Marketplace), uptime is critical. Uptime is the number of hours that a server is working and available. The longer it’s up the potential you have to make money. However, this comes with threats that include hacking, which means security is key.
Unbroken Supply Chains: The majority of online sellers have a supply chain that includes multiple vendors throughout the country or world. This becomes risky business when a critical part of your supply chain breaks down or there’s a shortage of raw materials that stops production of your product.
To remedy this potential situation recommend that your manufacturer diversify its sources of raw materials or consider ordering parts from multiple area factories.
Inventory Protection: When products sit too long on warehouse shelves there’s a host of potential negative outcomes. From mice and natural disasters to thieves and a deep freeze, your products aren’t necessarily safe when it comes to being exposed to the elements. Ensure the facility housing your merchandise has a failsafe in place.
On-time Order Fulfillment: Getting products to customers on time is how to create loyal buyers. But this only happens when fulfillment operations are running smooth. In order to ensure this critical aspect of your business consider contracting with multiple delivery services to give you flexibility that gets orders delivered on time.
In addition, make sure your 3PL provider (Third Party Logistics) has also done continuity planning so you’re on the same page when it comes to avoiding disruptions in service.
Customer Communications Channels: A crucial aspect of your e-commerce business continuity plan, customer service comes into play if your business is forced to slow or shut down temporarily. After all, communication is key.
WORKING WITH OUTSOURCED PROVIDERS
Because online businesses are often operating remotely, aspects of your continuity planning will directly involve vendors and service providers. Similarly, if you outsource fulfillment, ask your 3PL about its own business continuity plans and how that fits in with your business model.