COVID-19 has accelerated trends which were currently transforming our world. Companies not ready for an economy where business transactions and social activity are largely facilitated by digital platforms or frameworks may need to rethink their operating models. Demetri Theofanou, Investment Manager at Maven, argues that conditions will be fundamentally different when we fully emerge from the pandemic and that organisations will have to reimagine the future at both a practical and a conceptual level to navigate this transition.
As coronavirus lockdown restrictions start to ease, businesses across the country are looking to reignite and, in some cases, reshape their operations. What does the ‘new normal’ mean for your operations and workforce? Whilst it is still difficult to predict what the post-coronavirus period will look like, we can be confident that productivity, resilience and the ability to quickly adapt will be all-important going forward.
Following the global financial crisis between 2007-2008, many of the businesses that performed best and recovered quickly were the ones which took prompt and decisive actions to improve operational efficiencies. In the short-term, they reduced costs, managed working capital and invested further in key relationships (suppliers, customers, and employees). Similar actions will be needed now but, as a result of the pandemic, a more strategic and technology-led approach will also need to be taken that embeds lasting changes as society and the economy adapts to a ‘new normal’.
It is likely that businesses will need to shift towards newer, more flexible Cloud and SaaS based technology solutions, particularly as the benefits of centralised offices begin to be challenged vis-à-vis increasing adoption of “virtual” ways of working. A number of recent polls have suggested that people believe they are being more productive working remotely from home, where certain tasks can be completed more efficiently than in a busy office with multiple distractions. That said, a widespread move to home working also presents challenges that need to be carefully managed– a lack of personal interactions with colleagues and clients, as well as dealing with mental well-being with some people feeling isolated.
To ensure that businesses can successfully empower their employees to be more productive when working from home post COVID-19, they need to embrace ‘future of work’ practices. This will include virtual resources and technology support for remote workplaces and the introduction of appropriate technology to facilitate those new practices, such as digital devices and virtual collaboration tools. It is no surprise that video enterprise communication providers such as Zoom and Microsoft Teams have increased in popularity over the past few months. These virtual tools are becoming ever more important as business travel needs are reassessed and, whilst face to face meetings will not disappear entirely, it is highly likely that we will see a continued increase in the use of virtual meetings where practical.
In addition to a changing workplace environment, the post-COVID-19 world will also necessitate new supply chain models that prioritise resilience and responsiveness over low-cost, centralised production. To date businesses have adopted a low-cost approach to supply chain models – focusing on low-wage economies where products were assembled cheaply and shipped to higher income countries. Businesses in the UK had already began to review supply chain dynamics following Brexit and widespread concerns over delays at borders and ports, but in some cases are now having to expand these measures as inaccessibility of raw materials and subcomponents is resulting in increased distribution costs as the result of the pandemic. Reimagining and adapting strategy is going to be crucial for business owners, who will need to give serious thought as to how they construct supply chains that can function in a world in which international transport networks may be shut down again in similar emergencies.
It can be argued that going forward, companies will need to spread the risk geographically, with multiple suppliers used to source critical raw materials and components from a range of countries and regions. This has been illustrated recently in the healthcare sector, where the scramble for protective equipment, crucial medical equipment and testing kits has exposed the inherent risks of inventory and single-sourcing models based on cost control. In the medium to long-term, across many sectors, this may also lead to manufacturing hotspots coming back to the UK and other parts of the world.
We are also experiencing a marked technology shift to the use of increased automation in driving further efficiencies in the manufacturing process. This includes optimisation of the enterprise resource planning (ERP) backbone and implementation of robotic process automation (RPA) to remove unnecessary manual processes., which will be replaced by increased automation. Although these trends are well established, the ‘new normal’ will accelerate their adoption. In order to succeed, most businesses will need to adapt to some degree, to realign their strategy and objectives with the changes that we are now starting to see emerge.
Additionally, data analytics is becoming increasingly important, particularly as the pandemic has resulted in changes to consumer behaviour and needs. Businesses will need to find new ways of predicting consumer behaviours, leveraging the power of digital channels and maximising data available through social media. The need for businesses to adapt is becoming ever more critical as e-commerce platforms see dramatic increases in activity. According to Office for National Statistics, e-commerce accounted for 33% of all retail spend in the UK in May; the highest proportion on record and an increase from 31% recorded in April. The analysis of operational performance and modelling, to understand likely future performance, will also be critical as actionable information provides valuable insights in building an agile organisation, allowing businesses to react quickly to changing market conditions and the needs of their customers.
Established norms and operational models will be challenged by new, innovative companies who will look to be the most agile and adopt technologies and ways of working that will help them capitalise on the current social and economic changes ahead of competitors. For businesses to succeed they will need to be quick in adapting to the new landscape COVID-19 has so suddenly created.