The Aftermath from “Lock-Down”! – effective Supply Chains will be vital to the recovery – LogiSYM May/June 2020
In a few months we may well rewrite the story about this pandemic. Whilst we should have been able to better manage our exit from this one, having learnt from past similar disruptions, we still seem to be unprepared in many ways.
The Enterprise resilience on which we relied on for several years, that supposedly made us agile, leaner and more effective, seem to count for very little at this time. Many experts are trying to draw some parallels and solutions from past pandemics. But fail because this is different and has also been very aggressive in its spread.
Nevertheless, we will rewrite the script and note that there will have been things, some very obvious, where we should have done things differently and better. But will they serve us to cope with the next pandemic, which experts predict with some certainty?
Businesses seem to be coping reasonably well with the Work From Home (WFH) reality and managing to keep their heads above water in some manner of speaking. A controlled lock-down was intended to accelerate the reduction in infections. However, any upward trend in infections or new waves, is likely to call for tighter controls.
Any extension of disruptive working conditions, are likely to severely test the true resilience of any organisation and each of us ! Stress testing anything, implies some form of breakdown. But this must be avoided by being pro-active in re-inventing our working culture cohesion.
Such fragility in a business continuity plan (BCP), may not have been foreseen by Companies. The many new critical unknowns that we are discovering could make things more difficult to restart stalled activities. Nevertheless, now is the time to test the BCP resilience and adapt it work for us.
A BCP is usually for a short term survival period, with an expected speedy resumption of a “back-to-normal” scenario. Need to ensure that the longevity of the BCP can continue to be effective.
What the new normal be, whenever that comes, is yet to be seen ? But we need to keep anticipating this.
A New Reality
There are no prizes for predicting that there will be a new reality at the end of all this. But how that will compare with our old references of normal, is yet to be seen. The conditions of each Enterprise are different. As such the new realities will be different for all.
What will the differences be and the concerns that will prevent us restoring the ways things were ? These are the great unknowns. But as the lock-down plays out, we will see the emergence of new signals, that may well form the new normal around us.
The concerns will be many. The manner in which we will have to adjust will be big. It will be inconvenient and continue to be disruptive as we open up. Many will be very unhappy with the new restrictions, rules and constraints that will bind us all.
But in our unhappy and reluctant grapple to adapt to new norms, we need to be also mindful of the huge economic impact that is silently evolving into an even scarier reality. The economic stability that we all enjoyed, may well disappear very quickly before our eyes.
Personal wealth will take its toll, for at least the next 2 to 4 years. The global economic damage is likely to take a lot longer to recover to the levels of January 2020. Meantime there will be continued disruption in the reset of economic activities around the world.
The risks that surround us have changed to a new invisible enemy for which defensive tactics are yet to be invented. Our hope to mitigate these risks is medicine, but maybe that is not all?
The new reality for businesses is a serious one. And without getting into the details of testing, vaccines and social distancing, getting businesses up and running will be a major challenge.
“If not already here, post-virus will be a total new world order, an altered paradigm and a seismic shift from what we know today. In future, any businesses focusing only on being the most cost-effective, or the most labour-saving or the most efficient company in dying businesses of fading industries will become less and less relevant and sustainable” says William LIU (1)
This is indeed a very sobering thought ! But what if you are in a fading industry, how do you know and react to the necessary changes ? Many are likely to desperately try to revive their businesses pouring good money after bad with little or no avail!
Liu adds, “In the transformed world, a great number of companies will simply disappear and new ones in new sectors will emerge. Some of today’s household names will be gone forever and new names in yet-to-be-created industries will become the big players and big brands”
This new reality is mind boggling to many. Others are quick to dismiss it as a temporary distractor which will pass soon enough. But as we have seen over the last 30 years, each major disruption brings new and radical changes, previously unimaginable. So why should this be any different ?
Liu concludes his outlook by clearly stating that, “All new businesses will need to be extremely adaptive in meeting needs of the new marketplace. They’ll also need to be genuinely inventive to be able to create original products and services pertinent to future situations and environments. And the markets will be much more selective and differentiating, rewarding only the strongest and the best, and ruthlessly discarding the weak and the worst”.
It looks like a serious case of back to the drawing board to redefine our way forward, after another big paradigm shift. But where do we start?
How can we anticipate, invent, innovate and adapt to the new norm, for which we do not have the slightest clue of how our businesses will be affected?
Coming out of lock-down
What does “coming out of lock-down” really mean? There will be many different views on this, not least to think freedom is back. In effect coming out of a lock-down is technically just the lifting of mandatory imposed rules by the authorities of the land.
Now enter all the complexities that surround this
At this point any notion that we will have regained full freedom, may well be a wishful myth. Businesses need to address 3 major issues for when the lock-down is officially lifted.
- Assess the total economic damage suffered by the business during lock-down.
- Assess how to ramp-up activity to start generating revenue.
- An assess adapting to the new constraints around people and their mobility
- Potential Damage to Capabilities
Assessing the business damage suffered due to the lockdown and reduced activity, will depend on several factors. Not least on the health of the business before lock-down. Many businesses will have reduced headcount to immediately save costs, will have frozen purchases and put on hold all business plans on a wait and see basis, before going into lock-down.
Surely these actions are all the right things to do to contain costs and preserve cash. If this was a planned strategy, then fine. But if done on spontaneously selection, this could impact the restart.
Key questions – have staff reductions impacted capabilities required to restart, has freezing purchases lost allocations and delivery schedules, are inventory positioned in right locations and has the cash burn endured during the lock-down depleted reserves to restart?
These issues must be addressed immediately and not wait for lifting of the lock-down. Re-building capacity, competencies and positioning the necessary resources is a major action.
Restarting business activities after lock-down, will not just be about picking up the threads from where we left off – there will be many new unknowns and many surprises to deal with.
- Ramp-up to generate Revenue
The revenue gap created during the lock-down period could be of significant value. The timing of restarting activities and ramping-up to pre-lock-down levels could entail several months, barring any further disruptions.
Re-activating all the wheels in the supply chain could be like starting a business from zero. The damage assessment will highlight the significant areas to the rebuilding process. Both Customers and Suppliers will have also suffered an impact from lock-down. Their restart process will be relevant to their priorities. That is assuming they are still in business !
For the supply chain, a loss of suppliers will be a major issue to generate revenue. If inventories and raw materials are single sourced or specialist in nature, this will constitute a more serious breakdown in business continuity. Means literally starting from scratch. And this is no trivial task.
Generating revenue is priority. There needs to be an early and continuous engagement with all stakeholders – employees, key suppliers, key customers, customers-customers and all relevant parties.
The new risks and mitigation plans will have to be established without delay.
- Impact to People and Mobility
We have grown used to a high degree of freedom of mobility in our workplace. This has been good to build organisations, relationships and share problem solving issues. However, we all agree that sometimes it can be excessive and unnecessary and that we could still achieve a lot in alternative ways.
But after lock-down, it is expected that mobility will be tempered with new rules and regulations governing people’s behaviour and interactions. High dependency of on-line and video conferencing will continue. Business travel cannot be a general viable option. Rotating office-based work teams will be the new norm. Relationships with clients and suppliers without face-to-face contact must be sustained and leveraged through electronic means. Services and business performance of a new normal must deliver to survive.
There are many questions and many conditions that will be imposed on people mobility. It is essential that companies take the speedy initiatives of adapting quickly to their business priorities and work within the new mandated rules and regulations early.
Numerous daily events are shaping the new normal. These are not just news updates and then carry on “as normal” Daily events and updates are in fact the clues of what the new normal will shape-up to be.
Effective and high performing supply chains are about closely interconnected processes, enabled by people, technology and highly synchronised transitional timelines. With a high degree of automation and technology, supply chains need to continuously evolve and adapt. This requires organisation to be more anticipating, agile, innovative and engaged at all levels
Companies must take the lead to shape their own “aftermath” defining their strategies within the guidelines and regulations being rolled out. A wait and see policy by Companies is a misguided approach. All efforts must be underway during the lock-down period to formulate the plans to be deployed after lock-down and restore the business continuity strategies.
Shape your future and survive or wait and see, and fade away into oblivion!
Note: (1) William Liu is an independent business and money advisor to international for-profit corporations as well as not-for-profit organisations. He works strategically with Entrepreneurs and C-Suite executives in leadership, management, money and people to achieve excellence in performance and results. William currently resides and operates from Hong Kong, Singapore and Vietnam.