COVID-19: Managing the human and business impact of coronavirus

The COVID-19 pandemic remains a health and humanitarian crisis, but the business impact on organizations is now profound.

What to do now. What to do next.

 

As governments make significant interventions in response to the coronavirus, businesses are rapidly adjusting to the changing needs of their people, their customers and suppliers, while navigating the financial and operational challenges. MWC is helping enterprises address the short- and long-term consequences. Among the top priorities are protecting their people, building resilient supply chains and putting in place new ways to serve their customers.

Here we address specific business impacts across a range of function areas. We will update these pages as the crisis evolves and as companies seek to address subsequent challenges.

Impact on Customers: Acting to maintain responsive customer service

The impact of the coronavirus outbreak requires brands to move at unprecedented speed to serve their customers with quality while caring for their employees with compassion. That means re-evaluating how contact centers are leveraged, how employees deliver relevant customer experiences, where they work, and how digital channels can be used to support the increase in contact center volume.
Leaders that can make the shift to new ways of working will help reduce potential revenue loss, forge new levels of trust with their workforce, and position their businesses for renewed growth once the pandemic subsides.We recommend that contact center executives address three critical areas:

Impact on Supply Chain: The need for supply chain resilience

The impact of COVID-19 on supply chain disruption was already clear when the coronavirus outbreak was confined to parts of Asia. With the virus spreading rapidly, and several economies and regions now in lockdown, the severity is greater still.
The supply chain is critical in getting goods and services quickly, safely and securely to those at risk of infection or who are working at the frontline of the medical response. Companies have a responsibility to protect the health and welfare of their employees, their supply chain workers, and the wider communities they operate in, while maintaining a flow of products and materials.Companies should consider executing the following short-term tactical plan:

  • Within 72 hours: Assess current operations and outline initial recommendations
  • Within 1 week: Establish command center and begin rapid response deployment
  • Within 2 weeks: Rapidly adjust operations and continue response cycle
  • Within 4 weeks: Establish an ongoing operating capability

A continuous cycle of risk sensing, analysis, configuration, response and operation will help to optimize results and mitigate risks:

Impact on Leadership: The need to build human resilience

The greatest immediate impact of the COVID-19 outbreak is on workforces. Organizations are therefore focusing on their primary responsibility: caring for their people while rapidly managing the shift to new patterns of work.
At this critical time, they must see through these changes in ways that gain and maintain the trust of their people. That trust depends on leaders demonstrating their care for individuals as well as the wider workforce and community. It means sharing a clear plan and transparently showing how decisions are made. And it requires leadership teams who can proactively respond rather than react, anticipating their people’s changing needs.MWC analysis shows that even in the best of times, people’s trust and engagement at work is a function of three human needs: physical, mental and relational. These needs are magnified during times of crisis. Leaders who rise to the challenge by meeting them will build higher levels of human resilience that, in turn enable their people to adapt, engage and serve customers.
It does not fall to Chief Human Resources Officers to create the right environment to satisfy these human needs. All members of the C-suite must actively play their roles. We suggest 10 immediate steps that C-suite leaders can take to build human resilience.

Impact on the Workplace: Creating a digital elastic workplace

One of the immediate impacts of COVID-19 is higher rates of sick leave. Another is the need to manage an immediate shift to remote working. These challenges can be addressed by creating an Elastic Digital Workplace. Interventions will differ for each organization, but they should be based on the following foundations:

  • PROTECT AND EMPOWER YOUR PEOPLE:
    Adjust your workplace to enable your people to work remotely through digital collaboration tools. Build the necessary skills around these new ways of working. Start cultivating a digital culture. Construct a workplace of trust.
  • SERVE YOUR CUSTOMERS’ CORE NEEDS:
    Adapt to changing global and local conditions by serving your customers’ core needs, including being transparent in your operations and compassionate in your engagements all of which will create deeper, more trusted relationships.
  • ESTABLISH BUSINESS CONTINUITY:
    Ensure supplier relationships and business to business processes are effectively supported. Develop new business processes to adapt to new ways of collaborating and decision-making.

An Elastic Digital Workplace is enabled by policies and culture, technology and communications. The fundamental elements include collaboration tools, robust network connectivity to enable virtual working and advanced security procedures. As important are clear business continuity working protocols and communications, as well as guidance for employees, partners and customers.

We are here to help you navigate so schedule a call to discuss your specific business goals


COVID-19: Managing cash flow during a period of crisis

Coronavirus cash flow implications across extended supply chain

This piece suggests ways organizations can mitigate damages to their business during this volatile event.

As a typical “black swan” event, COVID-19 took the world by complete surprise. This newly identified coronavirus was first seen in Wuhan, the capital of Hubei province in central China, on December 31, 2019. As of March 2020, the virus has infected over 90,000 people, and led to more than 3,000 deaths. More importantly, more than 75 countries are now reporting positive cases of COVID-19 as the virus spreads globally, impacting communities, ecosystems, and supply chains far beyond China.

The focus of most businesses is now on protecting employees, understanding the risks to their business, and managing the supply chain disruptions caused by the efforts to contain the spread of COVID-19. The full impact of this epidemic on businesses and supply chains is still unknown, with the most optimistic forecasts predicting that normalcy in China may return by April,1 with a full global recovery lagging depending on how other geographies are ultimately affected by the virus. However, one thing is certain: this event will have global economic and financial ramifications that will be felt throughout global supply chains, from raw materials to finished products.

Responding to the immediate challenge

Borrowing from the lessons learned from the SARS outbreak in 2003, the 2008 recession and credit crunch, and the last black swan event to significantly impact global supply chains–the Japanese earthquake of 2011–we offer the following practices and strategies for consideration:

  • Ensure you have a robust framework for managing supply chain risk
  • Ensure your own financing remains viable
  • Focus on the cash-to-cash conversion cycle
  • Think like a CFO, across the organization
  • Revisit your variable costs
  • Revisit capital investment plans
  • Focus on inventory management
  • Extend payables, intelligently
  • Manage and expedite recievables
  • Consider alternative supply chain financing options
  • Audit payables and recievables transactions
  • Understand your business interruption insurance
  • Consider alternative or non-traditional revenue streams
  • Covert fixed to variable costs, where possible
  • Think beyond your four walls

What’s next: Recovering and returning to normal business operations

Cash flow management needs to be an integral element of a company’s overall COVID-19 risk assessment and action planning in the near term. Even for companies that have not yet been adversely affected, we recommend management teams with concerns about COVID-19 actively evaluate their cash flow requirements, develop appropriate actions under various scenarios, and assess potential risks in and to their customer base and supplier network.

 

We are here to help you navigate so schedule a call to discuss your specific business goals

COVID-19: Managing supply chain risk and disruption

Coronavirus highlights the need to transform traditional supply chain models

 

Could COVID-19 be the black swan event that finally forces many companies, and entire industries, to rethink and transform their global supply chain model? One fact is beyond doubt: It has already exposed the vulnerabilities of many organizations, especially those who have a high dependence on China to fulfill their need for raw materials or finished products.

China’s dominant role as the “world’s factory” means that any major disruption puts global supply chains at risk. Highlighting this is the fact that more than 200 of the Fortune Global 500 firms have a presence in Wuhan, the highly industrialized province where the outbreak originated, and which has been hardest hit. Companies whose supply chain is reliant on Tier 1 (direct) or Tier 2 (secondary) suppliers in China are likely to experience significant disruption, even if, according to the most optimistic reports, conditions approach normalcy in China by April.

How can organizations respond to the immediate change?

As the COVID-19 threat spreads, here are measures companies can take to protect their supply chain operations:

For companies that operate or have business relationships in China and other impacted countries, steps may include:
• Educate employees on COVID-19 symptoms and prevention
• Reinforce screening protocols
• Prepare for increased absenteeism
• Restrict non-essential travel and promote flexible working arrangements
• Align IT systems and support to evolving work requirements
• Prepare succession plans for key executive positions
• Focus on cash flow

For companies that produce, distribute, or source from suppliers in China and other impacted countries, steps may include:
• Enhance focus on workforce/labor planning
• Focus on Tier 1 supplier risk
• Illuminate the extended supply network
• Understand and activate alternate sources of supply
• Update inventory policy and planning parameters
• Enhance inbound materials visibility
• Prepare for plant closures
• Focus on production scheduling agility
• Evaluate alternative outbound logistics options and secure capacity
• Conduct global scenario planning

For companies that sell products or commodities to China and other impacted countries, steps may include:
• Understand the demand impact specific to your business
• Confirm short-term demand-supply synchronization strategy
• Prepare for potential channel shifts
• Evaluate alternative inbound logistics options
• Enhance allocated available to promise capability
• Open channels of communication with key customers
• Prepare for the rebound
• Conduct global scenario planning

Looking ahead: the imperative for a new supply chain model

A decades-long focus on supply chain optimization to minimize costs, reduce inventories, and drive up asset utilization has removed buffers and flexibility to absorb disruptions─and COVID-19 illustrates that many companies are not fully aware of the vulnerability of their supply chain relationships to global shocks.

Fortunately, new supply chain technologies are emerging that dramatically improve visibility across the end-to-end supply chain, and support companies’ ability to resist such shocks. The traditional linear supply chain model is transforming into digital supply networks (DSNs), where functional silos are broken down and organizations become connected to their complete supply network to enable end-to-end visibility, collaboration, agility, and optimization.

Leveraging advanced technologies such as the Internet of Things, artificial intelligence, robotics, and 5G, DSNs are designed to anticipate and meet future challenges. Whether it is a “black swan” event like COVID-19, trade war, act of war or terrorism, regulatory change, labor dispute, sudden spikes in demand, or supplier bankruptcy, organizations that deploy DSNs will be ready to deal with the unexpected.

*We are here to help you navigate so schedule a call to discuss your specific business goals

Supply talent, deliver growth

 

JANUARY 10, 2020

Recent MW Consulting, Inc. research shows that Chief Supply Chain Officers (CSCOs) are pioneering digitally enabled solutions, moving beyond efficiency to help drive customer centricity and growth. But even as they press forward with innovation, over 50 percent identify lack of change-ready culture as their biggest impediment.

To reach the customer centricity and growth success CSCOs will need to drive new levels of collaboration and productivity in their teams, reinventing their workforce, reimagining how humans and machines work together, and elevate their people.

We see two main actions that will help:

  • Empower people: Automation and new-skilling
  • Collaborate from the outside in

Leaders and laggards

Our survey of 1,350 executives showed that:

  • Leading companies have scaled more than 50 percent of their digital initiatives (proofs of concepts) and earned a return on digital investments greater than the average industry return on digital capital and return on digital investments.
  • Laggards are companies who have earned a return on digital investments less than the average industry return on digital on scaling more or less than half of digital proof of concepts.

Empowering people

Leaders have embraced automation, using it to free their human workforce from repetitive tasks, and are significantly more enthusiastic about investing in automation at scale—skilling their people for the digital world. The dual investment unlocks greater value than either could alone.

However, not all new aspects of digital supply chains can be addressed by reskilling. CSCOs will need to hire specialists, including analysts, value chain architects and orchestrators, amongst others.

Chart showing how SC&O Executives among Leaders are more keen to invest in Automation at Scale and New Skilling for Digital than their Laggard counterparts.

Leaders are significantly more enthusiastic about investing in automation at scale and skilling their people for the digital world.

Fresh talent for new ways of working

Organizations that sustain the benefits of change tend to do three things well:

  1. Build an infrastructure for change
  2. Hardwire the change, systematically
  3. Invest in the change capability

Combining their workforce’s resources with the best their ecosystems have to offer, leading CSCOs are reinventing the modern supply chain. No longer simply an efficiency engine, they are earning their seat at the C-suite table by becoming a key force for growth.

Human + machine for agile manufacturing

Bosch Rexroth introduced agile manufacturing in more than 100 factories. Single-arm robots serve as automatic production assistants, managing complex tasks like assembly and welding. The robots are also highly reconfigurable. When product demands on its Homburg factory changed, the existing line was modified over a single weekend.

While automating, the company also is working to enable flexibility and adaptability for its human employees. “ActiveAssist” workstations feature cameras, projectors and touch screens to display context-relevant information for each employee. The workstations provide specific instructions, visual cues and error correction during the assembly process of an individual part.

 

*We are here to help you navigate so schedule a call to discuss your specific business goals