As a business leader, you tirelessly consider all the ways to protect your company’s assets and fight possible black swans that might come your way. Supply chain management is one factor that likely keeps you awake at night. While there is no way to ensure you will receive the goods and materials your company needs in a timely manner, especially given the many unknowns like natural disasters or political conditions, it is vital to understand how insurance vehicles can protect your company’s forward momentum.
Even the most prepared companies are faced with issues that are beyond their control, especially manufacturers who have painstakingly sourced materials to create the products in a timely fashion. Take a yogurt company with a plastic cup contract, for example. So far, this yogurt company has been pleased with their timely shipments of cups; allowing them to fill and send their yogurt off to distribution centers and to stores. Due to storms in both Texas and Florida, petroleum shipments have been delayed. The cup supplier has fallen behind in their ability to produce and deliver. Unfortunately for the yogurt company, they have missed their shipping deadlines and each hour that passes equated to the loss of many thousands of dollars in revenue. Additionally, yogurt has had to be thrown out in the process.
How can disaster planning and proper insurance practices help companies reduce disruption, get back online quicker, and reclaim some of the lost revenue? Let’s break it down.
Companies that take the time to consider what possible disasters and challenges they might face, and which actions they can take to quickly get their companies back into production again are more prepared to face the obstacles that come their way. These plans are not only smart but in many cases, can reduce insurance premiums.
Involve Your Insurance Provider
Have you shared your disaster plan with your insurance company? Insurance companies love prepared organizations and are eager to insure those that are going to do everything in their power to reduce losses and get back online as quickly as possible.
Name Your Vendor’s Premise
Make sure major suppliers are named in your policy as a dependent location. If not, you may not be covered when they drop the ball or are faced with an unforeseen challenge. Adding these company names to your policy may increase your premium a bit, but a couple hundred dollars is smart money spent when production is held up day after day.
When a situation like this happens to your company, having a “Loss of Income from a dependent location” within your policy will help re-coup lost income and get back on track faster. Let’s look again at that yogurt company. Due to their delay in cup shipments, the business was set back three days. They threw away 40k gallons of milk. Because they had a plan in place and talked to their agent, the company had a reimbursement check within 3 months.
When was the last time you sat down and discussed your business challenges and opportunities with your insurance provider? Insurance is not a one and done process. As your company evolves, develops and grows, you should share these advances with your insurance provider to make sure you understand all the possible insurance tools available to your organization in the event of something unexpected.