HOW CAN CONSULTING HELP YOUR BUSINESS NAVIGATE PANDEMIC IMPACT

WHICH SOLUTIONS ARE AVAILABLE TO ASSIST BUSINESS EXECUTIVES AND BUSINESS OWNERS TO SUCCESSFULLY NAVIGATE THE PANDEMIC IMPACT AND POST-COVID SITUATION?

SYNOPSIS: Covid-19 and government responses thereto has significantly disrupted many industries and related business operations. Business executives and owners alike are searching for solutions to the many business challenges and increased risks they now have to manage daily.

Original article published on Quora.

ESTIMATED READING TIME: 2 min

Since early 2020 millions of businesses of all sizes all around the world have been affected by the impact of Covid-19 and, more specifically, negative and compounding impacts directly resulting from government regulatory responses to the Covid19 pandemic.

Businesses have been affected in different ways, including but not limited to:

• Significantly increased supply chain volatility and risks: Loss of suppliers, late delivery, unavailability of raw materials, looting or hijacking of supplies or deliveries
• Clients going out of business, increases in bad debt, slower inventory-to-cash-turnaround cycles, or inability to buy traditional order sizes, significantly loss or reduced demand,  volatility in demand from one period to the next, difficulty in accurately predicting sales or stock volumes
• Disruptions to business operations - temporary or longer-term shutdowns of infrastructure, changes to key markets, inaccessibility of facilities, additional business restrictions or compliance requirements, working from home, adjusting to a distributed work-force 
• Significant technological innovation and disruptive technologies gaining momentum
• Increased business disruption, loss of revenue, increases in unbudgeted costs, increases in unanticipated risk, inability to settle debts and pay running expenses
• Increased cybercrime, fraud, corruption, money-laundering
• Loss of key personnel and expertise
• And sadly a number of businesses have had to shut down altogether. 

While some like to believe everything will go back-to-normal and the good old days will return as soon as we reach herd immunity in our town, district, province or country, that is unlikely to be the case. The expected impact of the pandemic and related lockdowns and business interruptions will be felt for months and possibly years to come. Some industries are undergoing significant pressures and changes such as digitization are disruptively changing entire industries and business sectors. 

Different categories of Business and Management Consultants can advise and assist businesses with a variety of Covid19 and lockdown related business challenges (in no specific order):

• Reviewing and developing Strategies, redesigning Business Models to adjust to the “new normal”
• Identifying, mitigating and limiting supply chain risks, reshoring, nearshoring and replanning supply chains, sourcing new suppliers
• Rebalancing / optimising manufacturing/logistics/broader business operations impacted by changes in sales/legislation/business improvement: maximise revenue, reduce expenses, improve customer experience, risk management
• Improving access to information and decision-making with the use of data analytics/Adjusting or optimising KPIs and Metrics
• Asset disposal
• Business Rescue focussing on the rehabilitation of financially distressed companies (businesses unlikely to pay all of their debts as these become due and payable)
• Business Turnaround focussing on developing and implementing a set of actions required to save an organisation from business failure and return it to operational normality and financial solvency
• Balance sheet restructuring, working capital, bridging finance, debt restructuring, repayment relief and debt relief, new sources of debt, trade financing solutions
• Restructuring and Reorganising business entities
• Mergers & Acquisitions, Listings/IPOs, raising funds
• Optimising financial and tax planning, insurance, reducing financial risks
• Improving Governance and compliance with changing legislation
• Forensic investigations, developing and implementing controls to identify, prevent or report risks
• Plan, execute and de-risk projects and programs
• Embracing digital transformation (4ID), ranging from e.g. process automation, setting up data lakes, optimising architecture, to implementing Artificial intelligence, Machine Learning or IIOT solutions, identify risks and network vulnerabilities, improving business resilience and business continuity
• Interim management
• Crisis management
• Human Capital, Cultural and HR aspects - workforce planning, HR transformation, organisational design
• Improving marketing ROI, venturing into or improving existing e-commerce operations

This is a broad and non-exhaustive summary of what consultants can do for businesses impacted by Covid19. There is a wide range of consultants focusing on different industries and functional competencies - reach out today if you need assistance.

             

Have you given any thought to using consultants in your business or have any questions? Please comment in the comment section below.

If you have found this article useful or thought-provoking, please share it with others in your company or industry.

BUSINESS UNUSUAL (PART 2) - HOW WILL CORONAVIRUS AFFECT BUSINESSES?

Doing business in a time of Coronavirus/Covid-19, Supply Chain disruption and Business interruption - Potential impact on Businesses and Organisations

NOTE:

• This is a developing situation. Accordingly, role players continue to react and markets continue to adjust to the emerging situation. The historical data, facts and figures contained in this article were accurate at the time of publication, but statistical figures and some facts can change over time (e.g. share prices, mortality figures, etc). References below for further reading.
• This article is part 2 in a 3-parts series:
• Part 1.   What happened and how did we get here? (Word count: ±852)
• Part 2.   How can the current crisis affect commerce and industry? (Word count: ±1080)
• Part 3.   What are the business priories – immediate and over the next few months? Coronavirus Business Continuity Planning(Word count: ±1675)

PART 2 – What is the potential impact on commerce and industry?

The combined effects of Corona and the pretty much simultaneous Oil war is severe for global industry and commerce:

• The fall-out happened so fast that it simply was not on the radar of most organisations. Even the BCI (Business Continuity Institute) Risk Ranking (based on a survey done at the end of 2019) ranked non-occupational disease (including Coronavirus) at position no 21 out of the top 22 risks on their “2020 Risk and Threat Assessments” for the next 12 months.
• The global supply chain was destabilised on a previously unanticipated scale. On the manufacturing side, being China, firstly by inability or delays in shipping stock out, and subsequent factory closures, leading to unplanned production stoppages and stock shortages.
• In China itself, the shutdown had a hugely detrimental effect on the economy, e.g. car sales for Feb 2020 fell by 81.7%. Manufacturers struggle to reopen – Apple’s manufacturer Foxconn anticipated to regain only 50% capacity by the end of February, and an estimated 80% capacity by the end of March. 
• Large international buyers who import from China usually buy enough stock to carry them through the Chinese New Year’s holidays, but as a result of delays in receiving stock, many factories are running out of stock due to unexpected shortages. This, combined with the Corona-impact on health-and-safety requirements force manufacturers to close temporarily (think e.g. VW, Porsche, BMW, Ford, Chrysler PSA, Airbus), causing further disruptions down the chain.

• International Travel is severely being curtailed, and big passenger aeroplanes are grounded. Airports typically were not built to offer long term storage as airport space is typically at a premium. As a result, airlines are desperately seeking affordable and safe long-term storage as thousands of trips are being cancelled.

• Lastly, on the consumer side, panic buying is putting further pressure on the system due to unexpected volumes.
• This all leading to hitherto unseen levels of interruption in the global supply chain (Bullwhip effect + the Reverse Bullwhip effect) which may continue for months to come before supply and demand stabilise again.
• Financial markets around the world were hit hard in the fall-out, e.g. Nasdaq experienced the biggest single-week drop since the 2008 financial crisis, and US equities suffered their worst fall since Black Monday in 1987. 

The disruption of day-to-day life and the very tragic human cost of the Corona/Covid-19 virus on families and communities is severe. The combined effect of the aforementioned factors is causing havoc on international financial markets on a global scale, and more so in emerging economies such as South Africa. This impact may continue for the foreseeable future. The World Economic Forum calls it an "economic earthquake", what some would say is a perfect storm, and what others refer to as a Black Swan event - an extremely rare event with severe consequences.

Consider the following cases:

• The public education system in SA feeds more than 9 million disadvantaged school children daily. Extended school closures mean no food for many children – a sad but direct impact on the most vulnerable in our society.

• SASOL – the SA petrochemical giant caught up in the Oil war as collateral damage. Dropping international oil prices as well as overspend on their Lake Charles project resulted in an initial one day drop of 46.5% in the share price. Followed by subsequent movements over the following days, this cumulated in a +- 95 % drop since last year and loss of shareholder value down from R450 billion to ± R23 billion.
• A South African wholesaler/distributor (who shall remain nameless), who identified early 2020 (or thereabouts) as the perfect time for migrating to a new operational IT system, as well as moving into new facilities. Both activities at more or less the same time - What could go wrong, right? Unforeseen issues with the system appear to have resulted in system driving picking glitches and order backlogs. This, in turn, caused significant business interruption, missed deadlines and furious customers, culminating in certain reputational damage. All this before Corona kicked in.

Potential Business Impacts 

These are but three real-life case-studies of what has happened is happening and may continue to happen to businesses, organisations and society in general in the foreseeable short-term. Effects (specifically on commerce and industry) could include the following (in no specific order):

• Panic buying
• Capacity constraints
• Inability to service clients
• Suppliers out of stock
• Unplanned delays in receiving stock
• The increased cost of operations
• Inability to project demand accurately
• Inability to project stock requirements
• Increased working capital requirements
• Delayed cashflow
• Increases in debt repayment
• Unavailability of spares
• 3rd party credit risk
• Production or service interruptions
• Customer complaints
• SLA breaches
• Contract breaches
• Missed deadlines
• Lost customers
• Reputational damage
• Inventory previously considered as low-risk now being targeted by criminals (e.g. Face masks) due to increased demand
• Security of assets and IT systems/stock shrinkage
• Unusual spikes in demand
• Stock-outs resulting in missed sales
• Short or incomplete deliveries
• Stock stuck in transit or ports
• Production stoppages
• Factory shutdowns
• Store closures
• Forced changes in suppliers
• Forced changes in raw materials
• Loss of productivity
• Loss of revenue
• Ineffective crisis management
• Inability to make executive decisions
• Inability to process transactions
• Loss of key staff
• Succession plan gaps
• Absence/illness/quarantine of Key Decision-Makers, Topic Matter Experts, General workforce, Contractors, Service providers, Supplier reps / Key Contact Persons
• Inaccessibility of facilities (e.g. Due to temporary area quarantine requirements)

While the business impacts vary from one company to the next and between industries, business and industry will generally feel in the impact of greater variability, increased uncertainty and more risk.

Potential Industries Affected 

Industries affected off the top of my head include (but are not necessarily limited to): Arts & Culture, Education, Entertainment, Events, Food & Beverage, Gambling and Casinos, Healthcare, Hospitality, Manufacturing, Retail, Finance, Banking, Transport, Logistics & Supply Chain, Health, Safety & Security, Sports, Tourism. And further sectors may be indirectly affected by a fall in consumer confidence or changing consumption patterns such as Building & Construction, Energy, Property, Investment, and Insurance. And possibly a couple of others too.

CONCLUSION

The fallout and contagion (both medically and financially speaking) is material and pervasive. Very few businesses or organisation will not be affected in some shape or form.

In the next post, we will consider potential steps management can take in order to limit the effect on business or organisations.

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For more information, visit our website on www.cogniplex.co.za. A copy of this article is also posted on Linkedin.com 

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