!! Normality Canceled !!
The action taken now to mitigate the effects of the coronavirus on the supply chains must also strengthen the resilience of organizations in the face of inevitable and unforeseeable future shocks.
Even though the immediate human health toll of the spread of the coronavirus is changing very strongly and unfortunately too quickly, the economic effects of the crisis – and the livelihoods at stake – are becoming clearer. Indeed, companies must fight on several fronts at the same time.
First, they need to think about protecting the safety of their employees. And they must also maintain their operational viability increasingly under the pressure of a historic shock.
We can see that several companies are able to mobilize quickly and put in place crisis management mechanisms. Ideally in the form of a crisis governance unit, of course, focused on the short term.
The following question also arises; How can Supply Chain managers also prepare for the medium and long term? And thus build the resilience of their organizations?
In today’s landscape, we see that; the short-term answer is to address six questions that require rapid action across the extended supply chain.
These actions must be seen in parallel with the teams’ support measures. They must also comply with the latest political and health requirements:
- Create transparency on the value chain (from suppliers to customers).
- Estimate all the wealth and resources available on this supply chain.
- Evaluate the realistic demand of the end customer and respond to (or, if possible, contain) the purchasing behavior of customers in a shortage situation. To limit the famous amplification effect well known by our supply chain managers.
- Optimize production and distribution capacity to ensure employee safety. For example by providing personal protective equipment (PPE) and proceed with communication teams to share infection risk levels and work-from-home options. These measures will help leaders understand current and projected capacity levels: both in terms of labor and material.
- Identify and secure logistics capacity, accelerate it, if possible, and be flexible on the mode of transport, if necessary.
- Manage cash flow and net working capital by monitoring the flows even more. To identify where the problems are going to have a financial impact.
Once the immediate risks have been identified, we must also imagine ways to strengthen an industrial tool up to the new normal. However, the return to the operational health of companies after a serious closure is extremely difficult… China is observing it as the country is slowly returning to work.
Most industries will need to reactivate their entire supply chain.
But the temporal and intensity impacts of the coronavirus differ so much from one area to another that global supply chains will be disrupted for some considerable time.
The weakest point in the chain will determine the success or otherwise of a return to rehiring, training, and reaching new levels of productivity.
Managers must therefore reassess their entire industrial system and plan the appropriate actions; to put their business back on the path to efficient production, at the desired pace and scale.
The current health shock will likely change into a desire to limit some factors that have participated in making the coronavirus a global challenge; rather than a local problem to be managed. Governments are likely to feel encouraged and supported by their citizens to take a more active role in guiding economic activity.
Business leaders may need to anticipate policy and guideline changes supported by the population. Because society seeks to avoid, mitigate and prevent a future health crisis like the one we are experiencing today.
The consequences of the pandemic will also be an opportunity to learn from a plethora of innovations and social experiments. From working from home to large-scale surveillance.
This will help to understand which innovations, if adopted permanently, could significantly improve economic and social well-being, and which would prevent the general improvement of society. Even if they help to stop or limit the spread of the virus.
When we consider the degree of the changes that the coronavirus has brought… and will continue to bring in the weeks and months to come … We feel compelled to consider not only a health crisis of immense proportions but a reorganization of the world economic order.
It remains to be seen how exactly this crisis will evolve.
The challenge for leaders will be to have a clear path to start dealing in the next normal.
Normality is canceled.
This new normality is yet to be written.
And it is in this writing that the rebound is possible and that new opportunities will emerge.
Let’s write the new normal!