The coronavirus outbreak has caught many organisations off guard, with a domino effect being felt throughout their supply chains. Our recent business impact survey, conducted in April 2020, has elicited organisational leaders’ many concerns around COVID-19 and the strategies they are implementing (and planning to implement) to deal with the challenges.
The majority of survey respondents operate in North America, Africa and the Middle East, and Asia-Pacific.* Other regions include Europe, South America, and Australasia. Although a wide range of industries were represented, 29% – the majority – of respondents work in the agri-processing industry, 20% in food & beverages, 20% in beverage, and 10% in chemicals.
The number one immediate concern is safety of all – staff, contractors, etc. with 61% of responses. These safety concerns are already being addressed by manufacturing and warehouse operations – where shop-floor workers and many others cannot work remotely – as the survey reflects that 71% of respondents are putting in place (or planning to put in place) special social distancing measures as their main strategy to deal with the current crisis. These measures will contribute towards long-lasting, positive changes to the work environment if the safety processes and procedures are formalised and standardised throughout the organisation.
Other major short-term concerns for respondents include: how long the pandemic will last, decline in productivity, and its impact on internal operations – all receiving between 35%-39% of responses.
What are your immediate/short-term concerns due to COVID-19?
Looking beyond the fog of immediate uncertainty, the main long-term concern is the impact of the current crisis on the organisation’s bottom line, which received 53% of the responses. This is not surprising, and according to the World Economic Forum post ‘How the great COVID-19 reset can help firms build a sustainable future’ of 15 May 2020, “Millions of businesses are failing in the face of the pandemic and as many as 40% of businesses may not reopen after the disaster.”
Respondents’ other long-term concerns revolve around organisational design and ensuring more resilience to future crises, both receiving 43% of responses. Businesses are getting to grips with remote work and digitisation and working to set up and motivate virtual teams (where possible) to prepare businesses for the future world of work.
To do this effectively, companies will need to learn how to manage and entrench new practices in the organisation from a change management perspective, to ensure business continuity and ultimately, resilience.
Other concerns highlighted by respondents include what new business paradigms are here to stay, opportunities for the organisation, and how the crisis will impact the CI journey – all receiving between 39%-43% of responses, indicating that business resilience and adapting to the ‘new normal’ is certainly top of mind.
What are your long-term concerns?
This variety of responses may suggest respondents’ scope of uncertainty and myriad concerns, given that the outbreak is moving quickly, has completely changed buying behaviours and patterns, and created restrictions in delivery routes and staff shortages.
Economists are predicting three broad scenarios of recovery. The first scenario is that of a V-shaped recovery – an optimistic scenario in which the global economy contracts rapidly in the first half of 2020, but then makes an equally rapid recovery in the second half of the year, as the virus spread is contained.
The second scenario, a U-shaped recovery, would mean that global supply chains will continue to be disrupted and will only be restored after the peak in COVID-19 fatalities expected in the third quarter of 2020. In this scenario, economic recovery will only start at the end of 2020, extending into 2021.
The third scenario is referred to as the extended U-, or W-shaped scenario. This scenario would see a second flare-up of COVID-19 cases, leading to severe restrictions on economic activity that would prolong the downturn into 2021, with the rebound being much slower.
While no one knows exactly what to expect, the general consensus is that the impact on business performance will be severe, and companies need to start preparing for the future to ensure they are ready to deal with which ever scenario they are faced with.
Encouragingly, most companies are already actively planning for the future and putting measures in place to build business resilience.
Despite all the concerns and uncertainty, many companies are adapting and recalibrating their businesses. In addition to putting social distancing measures in place, a top priority as previously discussed, around 59% of respondents are conducting risk assessments and developing a risk management process, 46% are prioritising critical focus areas, and 39% are implementing digital and automated solutions. Companies are continuing to invest in technology to make their businesses more transparent and efficient, and to help identify potential for operational improvements. As revealed in a recent study by Harvard Business Review, businesses who both survived and thrived post-2007 recession mastered the delicate balance between cutting costs for immediate survival and investing to grow tomorrow.
What measures have you/will you be putting in place to deal with these challenges?
Finally, it is very encouraging that over 94% of respondents are maintaining their CI journey – although to various degrees. CI principles such as leading and managing change, standardising processes, increasing productivity – through employee engagement for example, and reducing waste can all contribute towards a competitive advantage for your business during these uncertain times. Focusing on CI helps keep costs down and preserve ROI. By refining practices and processes you can effectively navigate the COVID-19 challenges.