Reduced finished goods inventory means reduced number of products to be sold, which will ultimately result to reduced sales and revenues.
What the company is looking at is a profit level that is much lower than their usual level of earnings.
Of course, if profitability gets a major hit, this will also have adverse effects on business growth strategies.
Business disruptions usually lead to the company spending more on incidental expenses in order to do some damage control.
Thus, more attention is put on business continuity planning (BCP), which puts the company in a proactive position in planning how to ensure that it will still be able to deliver its critical products and services safely and smoothly, while meeting its legal, regulatory, and other obligations.
We can probably enumerate more than a dozen reasons why businesses should create and maintain BCP initiatives but, at the end of the day, there is only one ultimate goal or purpose for it, and that is to help ensure that the organization, business or company has the required resources, information, and capabilities to deal with emergencies and similar unexpected events, particularly their aftermath.Soon, the business will be unable to do anything except watch helplessly as its customers shift to the competition while it is still in the middle of figuring out how to deal with the fallout of the crisis that caused the interruption of business operations.The reputation of the business will be on the verge of ruin.The International Organization for Standardization, in ISO 22300, defined “business continuity” as the capability of an organization to continue the delivery of its products or services, at acceptable predefined levels, following a disruptive incident.It implies the responsibility of the business owners and management for the business in ensuring that it stays afloat and “on course” despite any obstacles or stumbling blocks it encounters along the way.When drawing up their business plans, they see their business continuing to exist and operate in the many years to come.Thus, they make every decision with continuity of the business in mind, while taking into account the possible effects of unexpected events that may lead to disruptions and interruptions in business operations.Some of the most likely effects are: When a retail store does not open for a week, the potential income that it usually earns in a one-week period is gone.Similarly, when a manufacturing plant is unable to operate even for a couple of days, the company will not be able to produce the average output of finished goods for distribution.For example, if the disruption is caused by a blizzard leading to the closure of manufacturing facilities, there is a high chance that the facilities have been damaged, and will require some major repairs.Salvaging remaining equipment and machinery will also entail spending on transportation and hauling services.