The road ahead for COVID-19

Since January, COVID-19 has attracted worldwide attention, challenging us in ways we haven’t experienced before as a society, requiring us to work together to stop it and manage it – all while simultaneously minimizing the disruptions on our daily lives and the negative impacts on the overall economy.

There’s no point in looking back and regretting what could have been done differently. Right now, we need to think positively, decide on the best course of remedial action, and learn some lessons that will help prevent it from happening again.

The main areas that need immediate attention

  • Keeping employees safe while maintaining operations at a reasonable level. This requires a full assessment of the industry, function, level of technology adoption and supporting infrastructure, as well as alignment between customer requirements and customer situation in relation to the crisis. There is no “one-size fits all” approach here. The measures taken by the healthcare sector will be very different from those taken by retailers of non-essential products, or by retailers of groceries, for example. What is essential is that organizations acknowledge these differences, adapt their working policies, and provide employees with the necessary tools and resources to act accordingly.
  • Managing the supply chain. This involves understanding the risks related to the supply chain and defining and prioritizing the actions required to deal with them – which can be, for example, ensuring the supply of critical materials (such as relocating inventory or even finding new alternative suppliers), or renegotiating supplier terms/agreements in view of the current situation.
  • Managing working capital. Many organizations have found that their ability to fulfil financial obligations has been jeopardized by stock market decline and a drop in overall demand. It is therefore essential to monitor cash flow and understand the levers available for generating cash. At the same time, the outbreak of the disease has significantly impacted the predicted future levels of demand and supply, causing organizations to review their Integrated Business Plans in order to drive initiatives such as adjusting and optimizing inventory levels, or even decisions on how to prioritize and fulfil customer demand.

Working on the next steps: the imperative to be ready and flexible

On several occasions we’ve heard customers say: “We have the information somewhere; we can retrieve it, if necessary.” Unfortunately, in the world in which we live today, this is no longer an option. It’s those that are prepared and able to make quick decisions that will manage these crises the best. Utilizing technology to create transparency, monitor risks and support decision-making will become the rule, not the exception.

Flexible and agile supply chains will become more valuable than ever before. The concept of micro supply chains – working with decentralized “mini operating models”, supplemented by more flexible contracts and sourcing from closer locations – will provide an alternative way to manage supply chain risk.

Building a more resilient supply chain

In addition to the above, KPMG supply chain specialists have compiled a long list of mid- and long-term actions that will ensure greater resilience in the future. It includes topics such as scenario planning (in order to develop pre-emptive action plans), the utilization of real-time data (in order to manage supplier risks), and the development of collaborative relationships with critical suppliers, among others. The list can be accessed through this link. We hope this can be a source of “food for thought” that will better prepare your organization for navigating the challenges ahead.