The rapidly escalating coronavirus outbreak is hitting businesses hard, with many being forced to scale back or even shut entirely to stifle the spread. From January 2020 to March 23rd, 2020, 40% of U.S. businesses were closed. Last week President Trump unveiled Guidelines for Opening Up America Again, a three-phased approach based on the advice of public health experts. The steps were established to help state and local officials when re-opening their economies, getting people back to work and continuing to protect American lives. This week we have drawn up some important considerations and five stages to help you get your manufacturing facility back up and running.
Stage One: Resolve
The first stage, resolve, involves determining the scale, pace and depth of action required. To do so, companies in advanced industries must take the following steps:
- establish a nerve center to steer the organization and manage risk and responses
- protect employees by making their health the paramount concern and adjusting production as needed
- screen and safeguard the supply chain by understanding risks and taking action to address disruption
- adapt marketing and sales while continuing to meet critical customer needs
- maintain financial health by improving liquidity, reducing costs and establishing a spend control tower
During the resolve phase, companies must also make difficult choices, these decisions will require a comprehensive understanding of the situation, including data-driven scenarios for market evolution.
Stage Two: Resilience
As industries experience virus-related shutdowns and economic pressures, they should move quickly to address near-term cash management challenges and broader resiliency issues. To understand what makes companies resilient, past shutdowns provide helpful insight. Some companies can also flourish during these hard times- typically those that took significant action at the outset. Our experience shows that resilient companies, defined as those in the top quintile of total revenue share within their sectors, took several key steps:
- sustaining organic revenue growth throughout the recession and out-performed on earnings and on revenue in recovery.
- moving faster and harder on productivity, preserving growth capacity.
- divest more during downturn and acquire more in the recovery period.
The most resilient companies also create end-to-end plans to guide their recovery. First identifying key risks, both internal and external, and developing a range of scenarios to predict future outcomes.
Stage Three: Reinstate
Restarting production facilities in non-essential businesses can be more challenging than shutting them down. It requires a thoughtful approach to revive the supply chain, match volume to actual demand and most importantly protect the workforce. For worker safety, factories must take special steps to resume operations. First, restarting capacity gradually, while monitoring the health of workers continuously. Given the complexity of global supply chains, ramping up factories in a coordinated way will be mission critical.
Stage Four: Reimagination
The coronavirus pandemic could fundamentally shift how people live, work and use technology. Advanced industries will likely see a shift in preferences as the expectations of workers and leaders begin to change. The organizations that reinvent themselves will emerge much stronger than those that simply work to reclaim their pre-COVID-19 position.
Stage Five: Reform
In addition to dealing with the significant societal changes coming in the next few months, industrial companies may want to consider strategies for addressing some of the persistent issues affecting the sector to avoid the next crisis. Businesses may want to minimize supply-chain risks by increasing local production or dividing production among more sites. Other imperatives include sustainability, workforce flexibility, and adaptability to accommodate changing tariffs. First and foremost, companies need early-warning systems to detect risks such as the coronavirus and get a head start on preparation. The spread of COVID-19 has already led to greater workforce flexibility, with teams adopting to remote or virtual ways of working. The current pandemic has revealed the global dependencies of most supply chains, and many industrial companies have shown a lack of contingency planning. Supply chain leaders are placing more emphasis on forecasting efforts to help them determine global ramp-ups and improve reaction times. Going forward, we expect that local to local supply chains will provide more flexibility and that vendors will be more accommodating. We also expect that companies will increasingly adopt digital and analytical tools as they recognize the real value of predictive monitoring and supply/demand matching.
The top priority of businesses should be keeping people safe while getting the economy back up and running. The global economy has quickly been affected, but now is the perfect opportunity to evaluate and have a plan in place. At RCI, we have been functioning as an essential business safely and effectively. We are here to help your business get back up and running. Have a project you need assistance on? Give us a call at 866-276-6242 or contact us.