Contingency Challenges

Background

Together with Food Analytical Laboratories, WALABS has a very experienced management team who have all been at some point part of the senior management or entrepreneurial development of the competition since 1989. Our respective pedigrees are well known and our success to date underlines the point.

We are a deliberate one large site operation in order to maximise on efficiencies and reduce costs to all parties. The one drawback is that it appears in the highly unlikely event that we suffer a 100% loss of the building there is no short term contingency plan.

On site contingency

We have a second chemistry and microbiology laboratory on site behind a one hour fire check wall on the basis that only fire can put us out of out of operation and finally remove the total loss fears.

In reality in the worse case scenario only one of our laboratories can be hit by fire and so work can be moved to the other fire walled department until restored. 

We are however insured to be fully restored within six months with our combined insurance policy, and in the case of total loss, until we are re-built all work will be subcontracted by us to other UKAS accredited laboratories and our insurance policy guarantees that our customer prices will remain fixed as we will recover higher priced sub contraction fees.

In addition we have planned for a second site at some point when work loads build up to 80% of present site capacity.

Challenge

We make the supposition that all multisite operations are in exactly the same position as single sites. Briefly the deduction has come about because if any of our competitors suffer a 100% loss of any one large facility then unless anyone has a mirrored lab, devoid of work then it will not be able to cope with a sudden influx of one or two million pounds worth plus of new work, as most labs operate at one million plus turnover.

The only recorded cases of labs (Multi-sited) suffering a short term 100% loss in the last five years were:

A large testing lab in Yorkshire, which was isolated by floods for a short period and work was transferred on a preferential basis. We were made aware as the clients not on the preferential list contacted us by them asking us to collect immediately.

A fire in a major competitor based in Cambridgeshire knocked them out for several months and many clients had to go elsewhere.

A minor fire in a Devonshire lab resulted in us and other lab businesses having to pick up that work.

Most labs caught out by fire are only partially affected, especially labs compliant with modern day building regulations. Often work can be shifted to other parts of the same building if it is large enough, as per the case at Falabs/Walabs

There are other reasons why large volumes of work cannot easily be re-located and that detail is as follows:

The DETAIL

Key staff, Legal and professional support

What contingency is there to replace Chartered Chemists (Chartered by the Royal society of Chemistry), Chartered Chemists are the credibility required in addition to honours degree in order to support results in any court proceedings or credibility issues. Are the existing Chartered Chemists part of the Food division or other divisional staff brought in a need be?

Likewise for key operational and management staff.

What experience is there in providing due diligence advice and contingency and what if it is lost?

Laboratory capacity

Most venture capital owned companies have as much capacity used up as they can to maximise investment. However they do have spare capacity in some sites to cope with fluctuations in workload, but absorbing significant work due to another group site failure is difficult for the following reasons:

Maybe only one lab in a group has enough spare capacity to absorb some significant preferential large contracts;

Labs will not carry enough spare trained staff to cope with the work the laboratory could handle. Staff are brought in and trained in line with growth.

Result Variation.

How many times have results been queried as annoying variances frequently occur when comparing laboratories, inside or outside group laboratory businesses. Using one large accredited contingent lab provides for consistency.

Staff transfer

Most technical staff are on £12 - £16k salaries with families, and so could not commute for extended periods of time realistically.

Costs of moving staff on extended temporary periods are very high.

There are associated training issues with changing sites from a quality point of view.

Equipment

There may not be enough equipment to cope without transferrals from one site to another.

All transferred equipment used in any form of assured measurement must be re-calibrated.

For microbiology, several thousand samples a day moved from one site to another would cause significant media production making difficulties due to lack of autoclaves (which weigh several tonnes, need to be calibrated before use and installed and commissioned, not an easy job even when new) and preparators/plate stackers have similar issues. Are enough 3 phase power supplies installed ready for use for example?

I.T.

What is the I.T. contingency and is it assured to ISO/IEC 27001:2005 (Information Security) which is a must. Many are not.

Product Specifications and customer contact details. Can these be transferred; are the systems already in place centrally?

Computerised systems that are claimed to be central are often database localised and all details such as contact details, products, specifications etc.. would have to be managed.

Finances & Insurances

Can the company meet its bank covenants and are disasters insured? It appears on the evidence in these recessionery times that VC owned businesses are not as secure as privately owned or independent ones. Is the company insured againstloss of service provision?

Short term issues Vs total disaster

Falabs/Walabs have very little chance of experiencing short term incidents that can knock them out of action, such as floods etc. due to its physical nature and build. It is an established over engineered heavily bricked built and modernised Victorian building, constructed on a hill with several routes of access.

The Legionella and second backup on site microbiologically will be fire sealed (Firewalled) against the main building allowing good contingency inside one site.

Total disaster is one where a complete rebuild is required, and that is where contingency starts to fall down for the above reasons. Falabs/Walabs cannot predict this and can only insure for it. We have made arrangements for our largest customers to move to other laboratories should this highly improbable situation occur. Our insurance policy we restore us within six months but it is a very cheap insurance as actuary calculations suggest it will not happen and thus premiums are low.

Summary

In essence changing site is like changing supplier and for a large laboratory site to be knocked out of action the above reasons make it almost impossible to demonstrate realistic contingency, especially given the fact that any one laboratory may have several hundred customers, so orders of priority must be given. 

Using one lab provides for consistency of results. Strategic contingency can be served by using more than one supplier and accepting some inconsistent results, which also helps maintain a healthy competitive regime to maintain cost efficiencies and quality.

Data is supplied electronically these days by any reputable company and so the differences between companies are blurred as the data format is probably identically available and spreadsheet/database compatible. Choices are more down to service and enthusiastic partners.

FALabs has a secure 100 year old Victorian over-engineered building with 24 inch walls, customised with security fencing, keypad access, biometric entry, 24 hour, 30 day recorded CCTV coverage both externally and internally, fully alarmed by Calibre Security with Redcare linked automatic response from Maximeyes private security. Maximeyes provide security patrols each night and the site is manned 24 hours per day. All shifts include trained operatives to deal with any event and all data is secured offsite by Rockford UK Ltd.

In the extremely unlikely event of a site closure we have deals with two other sites to carry out analytical support, in this case Test prices are assured by an insurance policy, which in itself provides full contingency.

This functionality has been set up to assure any concerns about data security and continuous service and we believe we are the only dedicated food business to provide precautions and protection to such a high level. Costs are kept down by using one large very secure and safe site. Yet another first from FAL.

Stephen Harris

Wednesday, 31 March 2010