For the last few months, we have lived a health crisis due to the COVID-19 that seems to develop into a global economic crisis. The lockdown has had a negative impact on the supply, the demand and the finance, the three fundamental pillars of the economy. That is why, we have to take the appropriate and coordinated measures in order to reduce the spread of the virus.
We do not exactly know the statistical data on the impact of this crisis on the economy. Although, there have been a drop in demand due to the lockdown (less transport use, commercial activity and energy consumption). Regarding the supply, many companies have been forced to temporarily close their doors. Yet, other have been operating well below their capabilities, leading to an overall production drop. That’s why Governments are developing debt relief measures and offering business deferral programs.
There have been different reactions to this crisis in the industrial sphere, many have opted for cost reduction and for seeking relief from Governments. Other companies have opted for the reuse of their production lines to manufacture emergency material such as face masks or ventilators. While many organizations opted for telecommuting and online commerce.
These are some measures that can be adopted by companies to reduce the COVID-19 impact:
- Telecommuting, whenever possible
- Assess the impact of the pandemic on the company from the operational and financial perspective
- Managing cash flow in the supply chain
- Address the impact of the pandemic on contract obligations with its business partners
- Address key risks and ensure business continuity.
The first thing to consider by company leaders in this situation is workforce, the health and well-being of employees must be ensured. The World Health Organization (WHO) advised to suspend all business trips, unless they are fully necessary and if not, to work from home. But this is not possible in all companies as many are not prepared for it. So, they have opted for a more flexible working method.
Moreover, there should also be a solid technology structure as there are many business processes that depend on technology and, above all, to be able to deal with a crisis like this more effectively.
Another measure companies should consider is to have a clear understanding of their supply chain at all levels, as this will allow them to identify the weakest points. The most critical products should be assessed as well as the best way to stabilize the supply chain. On the other hand, communication is essential. Leaders will have to keep internal and external stakeholders informed. This is a key part to deal with this crisis.
Sources: HLB Global, Industrial Analytics Plataform, Deloitte, Strategy Business