Over the past five months unemployment rates soared and GDP’s tumbled worldwide, causing fears of a global recession referred to as The Great Lockdown. These developments demanded two apparent opposites from organisations: going into ‘survival mode’ to prevent collapse, while simultaneously being forced to change and sometimes even reinvent structures and processes to keep the business running. What has this meant for the state of supply chain innovation? And more importantly, how do you overcome the hurdles that times of crisis bring so you can keep moving and improving?
Risk and resilience
While some sectors (such as e-fulfilment and delivery companies) certainly benefit from the turmoil and changed consumer behaviour, the effect of the COVID-19 pandemic on the chain as a whole can easily be described as ‘disruptive’. Logistics players are now confronted with decreasing volumes and volatility in the supply chain in addition to the existing pressure on margins. To spread risks and retain grip on what is happening within the supply chain, many companies have moved towards multisourcing and nearshoring solutions in recent years. Multisourcing makes the upstream supply chain of a company more resilient by building a network of trusted suppliers, decreasing dependency on a single party while maintaining quality standards. The loss of one supplier therefore doesn’t halt operations. Nearshoring is the outsourcing of processes to a location or country nearby the business headquarters or facilities, in order to cut costs while still being able to maintain control over quality. In current times, where countries and continents are so differently affected by a crisis and travel restrictions are a serious obstacle in business, keeping the entire supply chain within reach has made disruptions more manageable. Those that have taken the leap by investing in their digital capabilities have also found a way to increase their operational and financial resilience which has positive spill-over effects for their customers through improved efficiency and quality of services.
Reacting to change
Supply chain disruptions and the way companies react to them can have huge effects on logistics operations, but they rarely lead to a complete overhaul of the way organisations function fundamentally. In regular circumstances, individual companies within the network may change strategies or reorganise and, over time, other players may decide it is time to evolve in order to stay relevant. However, a crisis that affects all sectors equally such as COVID-19 results in not just a few forerunners, but the entire chain adopting new procedures and manners of working nearly at the same time. This has led to major changes in the workplace. Firstly, as is the case in almost every sector, working from home has become a common phenomenon. Secondly, we see that companies take measures to prevent close in-person contact in order to minimise contamination risk, for example digitisation of processes and stricter time planning. Interestingly, the by-product of these measures is often an increase in efficiency in day-to-day tasks.
So, does this mean COVID-19 has become a driver for innovation? Not necessarily. While it does force companies to rethink traditional ways of working and come up with new solutions, these solutions have arisen mostly in blue collar lines of work and were generally around for quite some years. The ‘new’ normal isn’t actually new; a lot of companies were just hesitant on the implementation or simply lacked incentive to change on their own behalf. AI and the overarching digital transition have huge potential for performance in many sectors, but implementation has been slow with a few parties spearheading the transformation and many laggards hesitant towards adopting new technologies. While some lower-level digital progress has been made to facilitate remote working, incorporating data and technology into daily operations is not a wide-scale phenomenon. It could actually be argued that COVID-19 has slowed down significant innovation within the supply chain, due to projects being canceled or put on hold for the time being. We’ve identified four challenges that contribute to this standstill, as well as advice on how organisations can keep pushing ahead with innovation despite less-than-optimal circumstances.
Every innovative company knows the value of hiring the right people and offering them a work environment where they can flourish. Therefore, a well-structured onboarding process is in the interest of both the employee and the employer. The current crisis forces companies to change their approach, at least temporarily. It can be a real challenge to offer a new employee a pleasant work environment where they can learn the ropes and take on responsibilities while they have to work from home. This is especially true in lines of work where human contact is essential. Good employers cannot avoid to thoroughly rethink and adjust their onboarding process in the light of the changed circumstances. While effective communication and feedback moments are always important, ensuring both take place becomes even more challenging when working remotely.
- Availability of resources
The current crisis has caused a lot of uncertainty for many companies in the supply chain. Keeping the company afloat becomes priority one, two and three, and takes up most of the already decreasing resources. This focus on day-to-day operations might result in a temporary blind spot for activities with a more extensive timeframe such as innovation. Moreover, with many companies scrambling to reorganise, there may be enough work pressure on the workforce as it is. However, this time of uncertainty might actually be the perfect time to focus on innovation. For example, crises often force companies to be critical of cost expenditure while maintaining quality of service or products. With the right people and the right guidance, even focusing on day-to-day activities can lead to quick wins and performance improvements that can save time and money.
A crisis generally causes organisations to be more reserved when it comes to investments. Why take even more risk in an already uncertain time? An understandable reflex, but one that can have huge implications for the future. Sacrificing long-term growth and success in order to save funds in the short-term could do more harm than good. It’s important that business leaders don’t just evaluate the cost of an investment, but ask themselves: What is the cost of doing nothing? What do we risk tomorrow if we don’t improve today? Investing in performance is not just a luxury saved for good times, but essential to surviving hard times. However, the nature of the investment changes. Rather than risky ventures with uncertain outcomes, an organisation facing a crisis is better off investing in improving the foundation of the company by tackling its existing processes and developing the workforce.
New business is important for innovation in more than one way. Obviously it creates the necessary income, but it provides key insights in customer demand as well. In the business development process, personal contact is vital in many cases. The current circumstances significantly complicate this, making it necessary to look past the accustomed business development strategies. Commercial actors in the organisations need to change how they approach clients and get creative about business development. Your online presence is the new exhibition booth. A good webcam and a solid internet connection is therefore vital to drive business forward. Even still, building a trusting business relationship through a screen is a lot harder than face-to-face. In some scenarios, it could be beneficial to have a trusted ‘network partner’ who can vouch for the other person and help mediate business deals, even in times when the negotiation takes place online. This external party could also aid in facilitating a safe, ‘coronaproof’ environment for real-life meetings if the own offices are not an option.
Surviving the crisis
If the current crisis has made one thing clear, it’s that the words of the late Rotterdam painter Willem de Kooning are as relevant as ever: I have to change to stay the same. In order to stay relevant during and after the pandemic, companies are forced to rethink their organisational processes and strategies to adapt to rapidly changing circumstances. After all, change is the only constant. The COVID-19 crisis is both an accelerator and an obstacle when it comes to innovation. It pushes companies towards digital and more efficient ways of working, while it also complicates future and long-term innovation plans because of the organisational challenges it presents. However, one thing futureproof business leaders have in common is that they don’t throw in the towel when times are tough—they seek the silver lining. Sometimes, this means finding the right sparring partner to help them see the light at the end of the tunnel and map out the road to get there.