Simultaneously disrupted demand and supply patterns

Do we know what the “new normal” will be? Not really. We are going to have to live in a world of grey for some time. We will need to prepare for the long term, whilst giving us the best possible flexibility and agility to deal with the many after-shocks and changes driven by Covid-19 global lockdowns.

Re-invent Business Models

Fine words, but what do these mean?

Agility

Sales and distribution patterns have been severely disrupted, especially in non-grocery retailing and hospitality. Demand has not, however, died for all products and services. Convenience, necessity, new interests and new appreciations of desired work-life balance are bringing new customer perspectives and buying behaviours.

Ecommerce has grown significantly in a few months; customer behaviours and preferences are changing:

• We are buying much more on-line.
• It’s easier and more fun, not to mention safer, to buy on-line.
• We are buying a wider range of products and categories on-line.
• Service, product availability and speed of delivery are more important priorities than pricing.

Customer behaviours and preferences are changing

In short, we need as businesses to attend to our digital world to become more connected and more important to our customers. We must be more agile and truly embrace digital technologies to link to our customers and meet their changing needs, giving them better and more endurably engaging customer experiences. These digital transformations must focus on customer experience, customer engagement, content, membership, and attendant fulfilment services to build new and enduring loyalty with customers. It will no longer be about ERP, but Order Management Systems, Customer Engagement and being able to Know your Customer.

Expect innovation in digital technologies

Expect innovation in stores – more automation, robots, and more use of AI to serve customers in more and engaging ways.

As markets change, service needs will change

Flexibility 

No one has a crystal ball providing reliable insight into what the future holds in 2020, 2021 and beyond. Rather than worry, businesses need to ingrain flexibility into their DNA now.

With digital transformations and technologies, it is possible to innovate and try new initiatives with customers much more quickly, and against target segments of customers/demographics. These enable you to see what wins and what doesn’t and to build a learning organisation that has innovation, adaption, and flexibility at its core.

Build Ecosystems of Resources

Expect growth and changes in:

• More vertical integration to build synergies in supply and customer service.
• Vendor-to-customer (V2C) direct shipments, with retailers and ecommerce companies holding less stock.
• More kerbside shipments/supply.
• Retail stores going “dark” to focus on regional fulfilment of on-line orders.

Resilience

Agility and flexibility are critical, but resilience is fundamentally important and must be addressed in parallel.

Liquidity paramount for success

We now find ourselves in a global economy with more risks. We have witnessed factory shutdowns for prolonged periods due to un-predicted pandemics – causing focused manufacturing strategies of the 1990s to start to collapse.

We have seen national interests prioritise supply over contracts/customers, and we have come to witness that we are shockingly vulnerable and exposed, with the awareness that we are not self-sufficient in many key sectors and categories. With tensions between nations on so many levels, and co-operation between governments lessening – risks to companies’ resilience and supply chains are at unprecedented levels.

So what should be on our agendas?

• Sell/spin off non-core assets to address liquidity and valuation.

• For those with the financial muscle, leverage mergers and acquisitions to build scale and reduce risks through vertical integration and developing flexible ecosystems of capable resources and suppliers.

Better Supply chain management – speed, flexibility, visibility

• Manage inventories closer to channels

• More focus on on-line stock availability and speed of order fulfilment – from regional supply centres and dark stores close to markets.
• Adopting more vendor-to-customer (V2C) shipments, especially for non-core range and higher value products.

• Changing sources of supply – a longer-term initiative.
  • But with the new focus on agility, speed of supply, reliability, quality, sustainability, and not just cost. This is likely to mean that near-shoring and local market supply will be valued more highly by customers and will present far less risk for companies.
    • In this emerging world, after our seismic shock, we need to be able to respond to demand quickly with a focus on quality. Long lead time supply contracts to the Far East will only build stock, commit capital too early, and potentially miss short-term and changing demand opportunities.
    • Customers are looking at the new world through the lens of global challenges such as climate control and sustainability. They will pay for ethical and green supply.

• As a result, we see a growth of digital technologies to manage supply chains – not the hybrid ERP systems of the 21st century. These technologies will focus on:
  • Visibility of supply – from design, product sampling through manufacture and transportation for delivery.
  • Flexible ability to switch in-bound inventory to demand channels on a short- term basis to meet market demands in an agile manner.
  • To book, track and trace inbound loads.

Summary

• There is no new normal, just simple clear imperatives for business transformation. Agility, flexibility and resilience are needed to respond to a rapidly changing world, with new customer behaviours and no likelihood of a return to traditional norms. We need to re-invent our business operating models – both from demand management and in the supply chain.

Imperatives :

• Agility
• Flexibility
• Resilience

The COVID 19 pandemic has, and is, having an impact on much of what we do and how we do it, for businesses, and in our behaviour as individuals.

• Smarter working has already arrived and will soon be the new standard across organisations.

Businesses will need to re-model and adapt to rapid on-going change

• Processes will have to change to create new, re-engineered ways to manage and accommodate novel and changed business offers, procedures, and guidelines; there will be new norms for operating, interacting, travelling, and distributing goods and services.

• Changing and adapting processes will be necessary not just because it is required but also because it is smart and better to do so. The reduction in travel, face-to-face meetings, “going to the office”, and the increased use of technology has generated a number of un-expected cost and efficiency benefits. New ways of working have quickly established themselves through necessity and expedience.

Disrupted and damaged supply chains to be re-configured

• Many businesses and employees have been forced to adapt and navigate change which has been forced on them – a process which is initially uncomfortable and dis-orientating.

Enforced change has brought unexpected benefits

What this means :

Significant changes to how and where business is done

• The ways of working and processes will need to change and adapt to new conditions, ways of interacting and operational practices in handling customers and associated supply chains.
• Business leaders will need to manage through these changes and will need support to design and implement the required modifications quickly, sustainably, and flexibly.

Rapid Digitisation, business benefits and societal gains

• Wider societal benefits will include reductions in pollution, less damage to the environment, and the capability to build more sustainable value chains and to achieve a better work-life balance for employees.
• The challenges will include increased fraud and on-line crime as many more transactions and communications are conducted on-line – initially including a new group, of mainly older people/those with less-developed technology skills.

Re-model, re-imagine and re-start your business – How we can help

• Assess what needs to change within your business as a consequence of the crisis – now and in the future – in terms of changed, new operating practices, working conditions in your sector and markets.
• Determine the level, type and extent of the changes you will need to make – operational, customer interaction, sourcing, raw materials, distribution, management practices.
• Re-model and adapt your business processes where needed, to optimise the changed market and commercial practices.
• Define, where necessary, the new processes, procedures and operating practices your business needs, the measurements and targets necessary for success.
• Deliver and implement the changed processes into your business to optimise revenue and manage costs.
• Identify new opportunities, revenue streams and markets that may be available as a consequence of the changes to the business landscape.

A structured, pragmatic approach to support businesses navigating the change

• Provide your teams with the leadership and management skills to ensure that changes stick and are effective in achieving your business goals and targets.
• Our structured methodology guides and supports businesses through the changes they need to make to re-energise revenue streams and protect cash – as they navigate the changed business landscape.

Business change – at pace

Visionary skills to navigate through this change

The crisis has caused immediate changes, at an unparalleled rate such as:

• an accelerated adoption of different, smarter ways of working with – meetings via video conferences, millions working from home in businesses that would never have envisioned such a transformation.
• consumers buying more and different products and services on-line.
• two years’ worth of digital transformation in two months.

Change is at pace and in different forms

Key attributes for leading the change

To manage businesses successfully through the recovery and then beyond the crisis, leaders will need:

• Agility
• Flexibility
• Resilience

As an initial priority, leaders will have to support the health and wellbeing of their organisations and teams, ensuring employees feel safe and that working environments are controlled, safe and meeting national and local guidelines. The primary focus needs to be on keeping people safe as the lockdown is eased and ongoing management of the pandemic risks.

Risk management and cash flow

Re-assess risks – now and in future

Leaders will have to review their business risks in the context of the new normal and in the near instantaneous changes to areas including supply chain continuity/security, sourcing and availability of raw materials, availability of labour (especially transient/seasonal labour), and the changing trade-offs that consumers are making in terms of costs versus availability.

Business readiness and preparation will be required to minimise risks associated with similar future outbreaks or crises with immediate health and safety implications. Organisations will need to have the technology and digital capability in place to continue operations and trade. A re-balanced use of technology, AI and robotics will be needed to counter the impact of restricted movement and human interaction.

The risk management and re-balancing of the assessment and impact of future crisis should form a key part of a leader’s post-pandemic recovery activity.

Change stages

Businesses will typically go through three stages to navigate and manage the crisis and beyond. These are:

In-crisis action: The immediate tasks and steps that businesses must take to protect their people, teams and customers and to safeguard their business revenue and liquidity.

Re-start: Creating, finding and developing new ways and processes to re-establish business continuity post lockdown; and adjusting to the new normal, and conditions – as many businesses have done with the rapid adoption of video conferencing for meetings internally and with customers, by increasing on-line offerings.

Reinvigorate, leading to new future and possibilities

Leadership will differentiate

Leadership critical to future success

• Communicate and illustrate the business direction to teams, customers and shareholders.
• Plan and navigate through the change stages to reach a re-invigorated, prosperous future.
• Enable and lead the creation of new operating models.
• Build a digital backbone to ensure digital readiness.

The skills and capabilities that leaders will need include:

• Empathy and flexibility – to navigate change and transition.
• Motivation – to help and support managers and teams to stick with the journey and transition through change.
• Emotional intelligence to understand how teams and the workforce will respond and react to new ways of working and to rapid, potentially unforeseen change.
• Living the vision – demonstrating by their individual behaviour and outlook how the future will be achieved.
• Engagement – with teams and customers to show belief, trust and personal commitment to the achievement of the vision and goals.
• Optimising and embracing technological change – digitisation will need to be adopted throughout the organisation and within all business processes to maintain industry-level expectations and to optimise efficiency opportunities.

Summary :

Leading the change successfully post-crisis will enable many businesses to survive, thrive and prosper based on re-envisioned futures, re-modelled business processes, and ways of working adapted and developed around the “new normal”.

Leadership skills will be critical to successful navigation and optimisation of the business possibilities available and to delivering the new future.

Leaders will need to :

• Protect the core skills, workforce and teams in the initial recovery stage.

• Plan widely and creatively; be bold, look beyond today and drive opportunities.

Leadership agenda – Re-model, energise and thrive

• Lead through setting and living the business vision for the future.
• Be steadfast and committed to achieving the new goals and potential available.
• Motivate, encourage and demonstrate how the future roadmap will be navigated.
• Optimise and bring forward digitisation to enhance and to protect the business.

Key Contacts: