One fire, local storm or water/ sprinkler pipe failure can cost you millions of dollars in property and lost business. Here are three “disaster” case studies and a checklist for preparedness and recovery.
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A little planning can help you to better survive a warehouse fire, local storm or broken water/ sprinkler pipe.
No one will forget the total devastation wrought by Hurricane Katrina, but many home furnishings retailers do fail to prepare for disasters brought about by fire, a local storm or broken water/ sprinkler pipe. In recent months there have been two multi-million dollar furniture retailer fires in the state of Washington and another in Leeds England. A severe wind storm in Tacoma, Washington resulted in six-figure damage when a portion of the showroom roof flew away, causing water damage. Fortunately no injuries or deaths resulted from these incidents but they reinforce the necessity to prepare for disasters. Reviewing the experiences of the furniture retailers quoted in this article can help you to minimize losses should a disaster occur at your facilities.
Previous Furniture World articles on fire preparedness focused on pre-incident planning from an operations point of view (“Be Prepared For A Fire”, July 1996 and “Warehouse Fire Compliance”, July 2003 can be found in the operations management article archives on www.furninfo.com). Additional administrative planning and response is necessary for any fire, storm or criminal activity. In researching this article, FURNITURE WORLD Magazine would like to acknowledge the assistance of Washington retailers Roger Bumps of Davis Furniture and Dave Harkness of Harkness Furniture. Both are in the midst of recovering from recent losses. Lynnwood Washington’s Fire Marshal Leroy Mcnulty and John Kraner, Assistant Fire Chief and head of Fire Prevention in Lancaster Ohio were additional valuable resources.
RECENT DISASTER #1
FURNITURE WORLD’S* SHOWROOM
Responding to a 3:30 AM security alarm, Lynnwood Washington police found Furniture World’s showroom engulfed in flames. The location was a total loss estimated at two million dollars. Reinforced by police reports of prior vandalism to a company truck, the Federal Bureau of Alcohol Tobacco Fire Arms and Explosives (ATF) investigation and the Lynnwood Fire Marshal staff determined arson was the cause. As of the date of publication of this issue, fire investigators are reviewing surveillance video from nearby businesses, and will be interviewing persons of interest. A $10,000 reward has been offered. Owners Jeff Raymond and his brother haven't decided whether they'll rebuild the Lynnwood store, but say they'll continue to operate at their Marysville location.
RECENT DISASTER #2
DAVIS FURNITURE WAREHOUSE
The Davis Furniture warehouse fire in Wenatchee Washington occurred a week before Christmas 2006 and resulted in total loss. Due to age and long time use prior to current fire codes, it had neither sprinkler nor alarm systems. Significant damage occurred in contiguous and adjacent buildings, including smoke and water damage to their retail store approximately 30 feet away. Store owners Roger and Cindy Bumps’ home and several other businesses were affected, but sprinklers reduced the damage in those areas. Now operating from temporary warehousing, a retail store renovation is under way and they will reopen in late February. The cause of the fire is unknown at this time. Arson is not suspected as a cause based on an investigation by federal ATF authorities, a standard procedure in costly fires.
There’s no better test of the value of planning ahead than a disaster. You can’t dwell on “would of, could of, or should of,” but following a disaster, retail managers must deal with the situation as it exists. Statistics show that 25 to 40 percent of firms do not recover from a fire or other disaster. In thinking about your own business, question whether you need to create or update your business practices.
While many communities don’t have strong fire department resources, Wenatchee’s excellent equipment and professional staff prevented much greater damage to the downtown community. The advance disaster planning done by Davis Furniture assured that the retail operation would recover and continue operations. Their periodic insurance reviews provided adequate aggregate coverage, an essential element when multiple buildings are on a common site. They also bound business interruption coverage to cover lost sales and profits, additional expenses and employee pay checks drawn during the store restoration. Daily transmission of information technology data to a secure outside site protected their business records. Their inventory records for furniture and accessories were excellent, and prior cycle counts verified validity for the salvage auditors sent in by Davis Furniture’s insurance company. Numerous photos provided a record of conditions before the fire. Customer contact is being maintained by updates on the company web site and ads. Store staff is also available to customers and suppliers at temporary offices.
Recognizing that management had a full plate with recovery issues and no experience or expertise dealing with insurance adjustment issues, a knowledgeable independent public adjuster was retained. Roger Bumps said this was one of their most important post incident decisions. Specialized restoration contractors came in to assess inventory and remove damaged property for disposal or salvage.
RECENT DISASTER #3
Retailer and President of the Western Home Furnishings Association, David Harkness has been dealing with a mid January severe wind and rain incident at his Tacoma, Washington store. Water entered a portion of the store through the wind damaged roof opening and drenched product and facilities. This reduced available display space during the restoration effort. Affected areas had to be stripped to the bare studs, insulation removed, carpets ripped out, etc. After thorough drying, fungicides were sprayed to eliminate any threat of mold spores being released into the air.
Mold insurance may or may not be available from your insurance coverage, but fungicide treatment is required under most building codes. Rebuilding following water damage has all the challenges of a fire with exception of dealing with smoke damage. His pre planning work was similar to that of Roger Bumps at Davis Furniture, so the future remains bright. In a couple of months, everything will be back to normal and customers will see top notch furniture settings.
RECENT DISASTER #4
MORE WATER DAMAGE
An emergency plan is also essential for accidents. During another recent incident at a large furniture store chain whose name is being withheld at their request, response by store management was delayed because their emergency notification list was not up to date. Calls from the fire department about a water flow from a broken sprinkler pipe did not reach current employees. The store was closed for almost a week while furniture was salvaged and carpets were cleaned by a restoration contractor. This was a grim reminder that internal and external emergency notifications must be kept up to date.
Lancaster Ohio’s Assistant Chief John Kraner, stated that in addition to a specific facility plan, daily attention to the basics is absolutely necessary. Enforcement of no smoking rules and appropriate butt disposal in approved areas are mandatory. Good housekeeping and maintaining clear distances from heaters, electrical panels and lights minimize opportunities for fires. Defective electrical cords are a particular problem in retail furniture showrooms and especially under aisle-way mats or carpet runners. Blown circuit breakers and other electrical issues must be thoroughly investigated as they frequently are warning signals of greater problems. Fire, heat and smoke alarm systems should be in place and properly maintained. A primary defense is a sprinkler system designed to handle the potential fire hazards in accord with applicable codes. If a facility is subject to other hazards such as flooding, the owner should have plans to address those risks as well.
The bottom line is that an effective disaster pre-plan is essential for retailer managers who want to ensure business continuity should any type of disaster occur. Having a plan on the shelf is not enough. You must be continually alert to conditions within your facility and surroundings. Adequate precautions will help to ensure that your livelihood, as well as the safety and job security of your employees, are as secure as possible.
The Institute for Business and Home Safety has a helpful free toolkit for disaster planning on its web site http://www.ibhs.org/docs/openforbusiness.pdf
Sample Business Preparedness/Recovery resources can be found at:
Disaster CheckList for
Preparedness & Recovery
• Decide risks to plan for: Fire, flood, earthquake, tornado, snow, criminal, utilities...
• Annual review of insurance coverage.
• Continuous attention to no smoking rules and housekeeping.
• Attention to electrical problems, cords and lighting.
• Install digital video security system with remote access.
• Off site backup of critical business data.
• Write down information: employees, insurance, CPA, lawyer, suppliers, etc.
• Take periodic walk-throughs with emergency response professionals.
• Implement annual review of disaster preparedness plans.
• Select alternate contacts who are empowered to initiate the disaster plan.
Daniel Bolger, P.E. provides operations consulting services to clients throughout North America. You can contact Dan at email@example.com
Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at firstname.lastname@example.org or call him direct at 740-503-8875.
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