Business Continuity-Disaster Recovery

Business Continuity-Disaster Recovery
Presented by Alisa Tomasetti
Supply Chain Management
Summit
August 2013
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Alisa Tomasetti
Title:
Senior Manager of Logistics
Planning
Company:
CVS Caremark
Email:
[email protected]
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Alisa Tomasetti is a Senior Manager of
Logistics Planning at CVS Caremark, the
largest integrated pharmacy company in the
United States with more than $123 billion in
annual revenue in 2012 and currently ranks
13th on the Fortune 500. She provides
expertise for product flow initiatives, is
responsible for leading 18 Distribution
Centers and Corporate Logistics through
business recovery events, and provides the
DCs and stores day to day support. Alisa, 32
year veteran at CVS, has demonstrated
expertise in warehousing and transportation,
product flow integration, change
management, and customer service
implementations. Alisa received a
“Breakthrough” Award for her leadership
during the Tuscaloosa Tornado recovery
efforts.
Business Continuity-Disaster Recovery
Presented by Alisa Tomasetti
Supply Chain Management
Summit
August 2013
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Agenda
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CVS/Caremark
CVS Logistics Network
Disaster Recovery-Retail Impact
Business Continuity vs. Disaster Recovery
Personal Experiences
Summary
Parting Comments
CVS/Caremark
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Revenues: $123 billion
Employees: 200,000
Rank on Fortune 500 list : 13
Percentage of U.S. population that lives within 3
miles of a CVS/pharmacy: 75
Number of MinuteClinic retail clinics: approx. 650
Number of patient visits to CVS’s MinuteClinic: 13
million
Number of CVS retail stores at the end of 2013:
7,500+
Number of daily CVS/pharmacy customers: 5 million
Number of active cardholders in CVS/pharmacy’s
ExtraCare program, the largest retail loyalty and
rewards program in the U.S.: 70 million
CVS Growth
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Year
# Stores
Acquisition
1997
2004
3900
5375
Revco
Eckerd
2006
6150
2008
6900
Albertson’s –
Osco/Sav-on
Longs Drugs
2013
7500+
Total Retail
locations
CVS Logistics Network

Distribution Centers Supplying Front Store and
Pharmacy Products to over 7,500 stores

18 Distribution Centers


 29 buildings
 11.5 million ft2
10 Full Service DCs
 CVS.com OTC in Indianapolis
2012
 Received 290 million cases
 Piece picked 2.4 billion “eaches”
 Case Picked 141 million cases
 Shipped 226 million parcels
 438,000 store deliveries
 48 million miles
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Best-In-Class Practices & Technology
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Conveyor and high-speed sortation
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Light and voice picking systems
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Integrated systems

Warehouse management
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Labor management
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Transportation & route
optimization
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Portal based supplier
collaboration tools
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Energy-efficient design concepts
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PRIDE culture
Logistics Network in 2004
•11 Distribution Centers
•31 States Serviced
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Logistics Network in 2013
Hawaii
•18 Distribution Centers
•42 States + Puerto Rico
2013 Brazil
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Disasters-Retail Impact
• In 2011 the International Council of Shopping Centers
showed that some retail sales dropped during the week
of August 29thwhile others increased due to Hurricane
Irene, which interrupted shopping on the East Coast.
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Retail Magnitude Continued
Hurricane Sandy October 2012--In
January 2013 — after considerable political
controversy — the U.S. Congress passed
a $51 billion relief bill.
According to 2010 Census Bureau data,
there were “479,075 business
establishments in the Connecticut, New
Jersey and New York counties declared
major disaster areas. The total
employment and annual payroll in these
areas was 6,723,791 and $427.4 billion
respectively. These counties represent
61.2 percent of the total employment in
Connecticut, 45.7 percent of the total
employment in New Jersey, and 59.2
percent of the total employment in New
York state.”
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Actual Incidents with Impact to Businesses/ CVS Caremark in 2012 / 2013
Event
Trigger
When
Hurricane Sandy
Natural – Weather Related
Fall of 2012
Winter Storm Nemo
Natural – Weather Related
Winter of 2013
Boston Marathon Bombings
Man Made – Human Factor - Terrorist
Spring of 2013
Oklahoma Tornadoes
Natural – Weather Related
Spring of 2013
G. Zimmerman Court Case
Man Made – Human Factor – Potential
Violent Crime
Summer of 2013
Industry Overall Statistics (gathered from FEMA)
$6Billion spent in 2013 for Natural Disasters Before Hurricane Season Even Opens
• Oklahoma Insurance Commissioner, John Doak, said that the insured losses from the
Oklahoma tornadoes could exceed $2 billion
• The single most expensive natural disaster in the United States was 2005′s Hurricane
Katrina, which NOAA eventually said cost around $81 billion in total damage
• The single most expensive natural disaster of all time is the earthquake and tsunami
that hit Japan in 2011, which caused a serious nuclear disaster. World Bank priced that
disaster at a record-shattering $235 billion
•
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FEMA-”The Waffle House Index”
• The term was coined by FEMA Administrator Craig Fugate in May
2011, following the Joplin tornado; the two Waffle House
restaurants in Joplin remained open after the EF5 multiplevortex tornado struck the city on May 22.[1][2] According to Fugate,
"If you get there and the Waffle House is closed? That’s
really bad. That’s where you go to work."[3]
"We are not in the food business...We
are in the People business"
Joe Rogers, Sr., Co-Founder of Waffle
House Inc.
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FEMA “Waffle House Index”
• The Index has three levels, based on
the service at the restaurant following
a storm:[3]
• Green: the restaurant is serving a full
menu, indicating the restaurant has
power and damage is limited.
• Yellow: the restaurant is serving a
limited menu, indicating there may be
no power or only power from a
generator or food supplies may be
low.
• Red: the restaurant is closed,
indicating severe damage.
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Business Continuity vs Disaster Recovery
• Because the
restaurants have a
disaster plan and a cutdown menu prepared for
times when there is no
power or limited supplies,
the Waffle House
Index rarely reaches
the red level.[1][3]
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The difference between Business Continuity
and Disaster Recovery
Business Continuity
• Being prepared
• Having a plan
• Understanding critical
business functions
• Often resides under
Finance Dept.
• Mock drills/table top
reviews
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Disaster Recovery
• Executing plan
• Reacting to needs of
the situation.
• Flexible/adaptable
• Supported by/Intertwined
with Business Continuity
plan
• Significant pressure to
execute.
What comes to mind when you
think disaster?
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Disaster
Strikes!
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Other Business Interruptions
Anthrax
Bird Flu-Legionaires disease
Computer hackingtechnology failure
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Personal Experiences
“Character cannot be developed in ease
and quiet. Only through experience of
trial and suffering can the soul be
strengthened, vision cleared, ambition
inspired, and success achieved.”
Helen Keller (1880-1968)
DC Director used this quote to reference our NJ shipping team –
during “Sandy”
“Handling emergencies is just one of the things
we do well; but pitching in together to achieve it
all…..is what makes us CVS/Caremark!”
Alisa Tomasetti November 2012 (internal article published)
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9/11/2001
• Our PA Distribution Center is located 1.5 miles from
where flight 93 went down.
– Major concentration of stores in
Manhattan/Bronx, DC and a store inside the
Pentagon
– Affects to the associates (stores, drivers, etc)
– Govt. providing direction
• Change fleet to straight trucks from trailers
• Road/bridge access
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Hurricane Katrina
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9 DCs servicing the market
Mobile RX trailer
Staff Member affects
Arranged motorcycle
escorts for entry into the
Astrodome
– Arranged for truckloads of ice
for give-away
• Arranged a gas tanker for
Texas associates
• Bartered for
hotel/gasoline/restaurant
access for construction
teams and displaced
associates
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Mother Nature Strikes Again
• Somerset, PA roof collapse-Happy Valentine’s day 2010!
– 70” + of snowfall
– 8-12 week recovery effort
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Massive winter storm blitzes U.S. from
Southwest eastward
By the CNN Wire Staff
February 1, 2011 11:01 p.m. EST
• Monster snow storm-began with ice for the super bowl in
TX and continued across the entire Midwest and east
coast.
– 8 DCs effected in different stages of recovery
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Tuscaloosa, AL Tornados
• 3 miles from our Bessemer Distribution
Center
– Many stores and associates affected-#4819 total lossTWICE!
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Power outages--damaging effect on
recovery
• Ability to retrieve orders from
stores
• Ability to send orders to the
DC for processing
• Ability to communicate
• DC production (orders in
queue)
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Hurricane Sandy
‘Frankenstorm’ crisis map
ahead of Hurricane Sandy’s
arrival
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CVS meets “Sandy”
• Over 1200 stores
closed at one time
• NJ DC was operational
less than 24 hrs and
delivering product 1.5
days sooner than UPS!
• Post Storm-2 mobile RX
units dispatched to
assist the community
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Lumberton NJ DC
CVS Damages
• 62 stores damaged;
12 rebuilt
Ventnor, NJ
Margate City, NJ
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Sandy -continued
• Supported Home Land
Security with special
order(s)
• At peak NJ DC had 890
pallets/124 stores picked
but no place to deliver
• Over $250K in
cash/product donations
to American Red Cross
• Over 450 special store
deliveries from 5
Distribution Centers
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“Yes, Honey we’re fine,
however we have a visitor!”
Sandy/CVS fun facts
• Shipped….and sold
– 120K flashlights
– 725K packs of batteries
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Sandy Fun Facts continued
– 500K cases water (12M bottles)
• 315 truckloads
– Lined up would be 3.2M or a 5K road race!
• Would have filled 75 pool (avg 20K gallons)
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CVS Approach
• SAFETY First and always
– Drivers-associates-physical structure prep
• The process continues with multifunctional
teams of people both in the field and in
corporate assessing the magnitude of the
damage
• Communications
– Closings (stores, schools, evacuations, etc)
– DC/equipment damage assessments
– Inventory status
• Executive Briefings
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CVS Sales Approach
• Be in stock-customers will go
elsewhere fast
– If we miss the window-we miss
the sale!
• The experience must be
quick/easy
• Pre-position inventory
• Overstock returns
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Assisting the Communities
• Community service
– RX mobile Pharmacy
– Free water
– Ice Giveaways
– Non perishable food packs
– Personal care kits
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CVS Newest Approach
• Improvement-Push vs Pull
– Batteries/flashlights/Water
– Key sales items
– Meds/scripts
PRE/
POST
EVENT
NEEDS
• 2013 data driven decisions with
“boots on the ground” influence
– Modeling tool(s)
• T-7 days –
• T-5 and
• T-3 (peak efforts)
– Inventory “lifts”/pre-position
– Mapping software
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Summary-What did we talk about?
• CVS and our distribution network
• Impacts Disasters have on retail
• Difference between Business
Continuity and Disaster Recovery
• Personal experiences
• CVS Approach
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Leadership Recommendations
• Customers, Stores, Warehouse Operations and
cost control are in conflict during recoveryDon’t get caught in red tape!
– Doing what’s right is often the most difficult!
– Be empowered and make decisions-waiting incurs
costs (people, time and service)
• Logistics/Supply Chain plays a major role in
recovery efforts
– But we’re not magical with our abilities
– Be ready..understand…….What your limit is!
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Closing Truths
“Disaster Recovery is the craziest, most
stressful, most demanding, hair raising
and……..singularly the most rewarding
aspect of my job.“
Lisa Tomasetti Sr. Manager Logistics Planning CVS/Caremark
As a “STRESS Eater a “hearty” disaster is good for an
added 5 pounds!” 
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Thank you
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