The COVID-19 pandemic, so far, has affected more countries than both the world wars put together. The virus is not only affecting people physically but causing great mental and financial strain. The situation has moved on from an emerging threat to a real lasting danger both for consumers and companies.
Companies can’t afford to sit and wait with this unpredictable nature of the deadly virus and they need to respond post-haste to this situation. It’s a turning edge that could lead to sustainability if the decisions are right and quick but could lead to a downfall if they just wait and to see what’s forthcoming.
Here are some ways to get the business going in the “new normal”.
1. Set Up An Emergency Response Team
As the situation escalates and requires immediate decision making, it’s important to set up a cross-functional emergency response team. The team should have the authority to make recommendations based on the assessment of risks in areas related to workforce, supply, inventory, and consumer sentiment and its impact on consumer demand, retailer reactions, and actions by their competitors.
2. Safety of Employees, Customers and Other Partners
People are our biggest assets, and this becomes immensely important at such times. Companies should:
- Ensure compliance with the latest guidelines.
- Initiate work from home as far as possible.
- People working in the office, factory, etc. should be screened daily.
- Teams that are exposed due to customer or store visits such as personnel, sales, etc. must be equipped with necessary sanitary and personal protection equipment.
- Regulate or minimize office visits from third parties.
- Avoid gatherings and start considering video conferencing.
- Deep cleaning and sanitation of the most-used areas across all facilities.
- Consider implementing an alternate workforce. Split core functions into two teams that work in the office on alternating days. In case, one fails to operate, the other one is the backup.
3. Review Your Production Plan and Inventory Management
- Accelerate productivity for categories in demand. Reduce focus for categories facing temporary decline so that you make a higher profit.
- Split production across different areas so that transportation is not badly affected.
- Check if you can adopt the “forward deployment of inventory” model of managing inventory.
- Contact your co-manufacturers for spare capacity and move inventory as close to the market as possible.
4. Re-Look At Your Transportation Facilities
- Come up with strategies to get your product delivered in potential lockdown areas.
- Review delivery plans to stock up as close to the market as possible. You may consider delivering to stores rather than distribution centers or home deliveries for customers.
- Focus on the essentials and avoid the non-essentials
- You might want to set up an alliance with your competitors to work more effectively in such times.
- You may expand your network of logistics providers for different warehouses and distribution centers, as movement across the borders is restricted.
5. Managing Budgets, M&A Deals
In this time of crisis when cash flows are limited, you need to keep a check on the budget. The main priority will be to plan, and manage budget wisely.
- Limiting promotional activities could save you a lot.
- Leverage this situation as a great opportunity to assess your customer network and determine which relationships to preserve and work on in a worst-case scenario.
- Review your credit policies to avoid burning up budgets unnecessarily.
- Shift your focus from out-of-home and physical media to online and digital media.
- Don’t spend on marketing activities if not necessary, to save for important deals and improvement in cash flow and working capital.
- Cut or delay nonessential or nonstrategic projects.
- Overhead can be reduced by canceling unimportant training and spending on the required inventory.
- Working with the M&A team and investment bankers to formulate contingency plans would be helpful. Also, be in regular contact with the board and other stakeholders, to know when to apply larger cost-reduction techniques.
POST CRISIS RECOVERY & CHANGES
Managers, executives, and entrepreneurs who have been trained to maximize profits and revenues will now have to shift their focus to sustain their business rather than on making huge profits.
While it’s important to set some short term goals, companies must not lose sight of their long term goals.
Post COVID-19 normalcy won’t be the same as January 2020. People will have to accord with the “new normal” in the following months. Some of these behavioral changes made during COVID-19 will continue to be seen post-COVID-19 and will become a new norm.
The most impacted areas of change include matters of supply continuity, distribution, and logistics, evolving customer relationships, etc.
Watch this video – Surviving the Unusual – for tips from expert investor on how to handle the situation.
- Businesses must come up with cash runway estimates for at least a year. The discovery of vaccines is expected to take another year to reach the global population for the restoration of normalcy.
- All the established businesses and start-ups must anticipate the worst-case scenarios for their turnovers and cash flow. All the futuristic assumptions made earlier about businesses should be thought through again.
- Costs will need to be cut ruthlessly while ensuring a benevolent behavior towards the employees and maintaining a healthy environment for working.
- Focus on the existing customers as they are your primary source of consistent cash flow; losing them could prove detrimental to your business. But don’t neglect to generate new clients completely.
- Emphasize and build digital capabilities: finding out new and smart ways of working safely and securely comprising work-from-home practices, virtual conferences, and tech-enabled management and sales activities.
- New strategies for sales and marketing need to be formulated for becoming omni-channel leaders. Making “anywhere, anytime” delivering available for customers. And amidst and post-crisis, the safety of employees, customers and business partners will secure the top priority.
- More automation expenditures see their way post-crisis as new technological implementations help create flexible capacity and provide end-to-end visibility for supply chains through predictive/prescriptive analytics.
- Re-balancing stock levels, updating M&A/target partnership list, to adjust to post-crisis demand is vital. Companies will need to review and make amendments in their three-year or 5-year plans.
The moments of strain are widely viewed as a time of depression only but in a broader view this moment can act as a catalyst to build longer-term capabilities to serve customers and consumer needs more effectively and efficiently.