Published: July 08, 2014 by Peter MacLeod

The recent fire at the distribution centre of leading British online retailer ASOS is a textbook example in the importance of having an effective disaster recovery plan in place across your organisation’s supply chain, in order to ensure business continuity says, Jonathan Gibson, head of logistics at supply chain consultancy firm Crimson & Co.

The incident, which occurred in late June at ASOS’s main distribution centre in Barnsley, caused damage to 20% of the retailer’s stock, and consequently required the business to temporarily cease trading. Despite this the online retailer made an efficient recovery and was operational again in 48 hours.

Gibson says that the impressive recovery strategy is an eye-opener to fellow retailers, demonstrating the importance of implementing a structured plan that is able to identify risks across your business.

“The ASOS warehouse fire brings home the importance of having back up and disaster recovery processes in place across your organisation’s supply chain," says Gibson. "Ultimately, consumer’s sympathy for an incident such as this will only go so far, and if you are offline for a significant amount of time customer loyalty will waiver and they will start to look elsewhere.

“Considering the scale of the fire, ASOS really have to be praised for their response and other retailers should be looking at this incident closely in order to ensure the same measures are taken across their supply chains.

“Risks to the supply chain are not consigned to supplier failure – technical failures not to mention criminal acts can have significant influences as well as political and economic disturbances. It’s imperative therefore to identify risks and set up contingency plans accounting for each element, whether it be identifying alternative suppliers or looking at how you manage and store stock.

"In ASOS’s case, its Barnsley distribution centre housed 70% of the firm’s entire stock; the fact that only 20% was impacted demonstrates that an effective disaster recovery review had been undertaken. A lot of organisations feel that business continuity planning can be an unnecessary, costly exercise but in the face of disaster the cost of not having a plan in place could be devastating.

"It’s imperative that plans are regularly reviewed and practiced to ensure that they can be implemented effectively during a disaster.

“Another effective tool which ASOS employed was ensuring it communicated to its customers. Radio silence can be as deadly as the disaster itself – communication and transparency allows customers to be aware of the facts and the actions that are being taken to address the problems. Finally, recognising the difficulties this has put on your customers and incentivising them, which ASOS did with its 50% sale post fire, ensures that the customers don’t stray and remain committed to your business.

“Overall, it was a textbook example of what a company should do in the face of an unprecedented disaster. Ensuring effective disaster recovery processes across all elements of your supply chain is essential to any organisation regardless of size. Those that don’t embrace this will ultimately be the ones paying for a lot more than lost stock.”