The Coronavirus (COVID-19) outbreak has been a black swan event for our generation forcing companies to go back to the drawing board across continents for ensuring business continuity. It has affected businesses operationally, monetarily and even impacted lives of employees personally. As we brace ourselves for life after the lockdown, here are some key takeaways for firms to mull over.
While most service sector firms would have experienced it during the initial lockdown weeks, working from home has been a huge success. They are now reconsidering the need to have employees who are able to operate from home or on the go instead of being housed in expensive office spaces across the country. Even opting for co-working spaces instead seems viable as it would help save on high rental costs.
However, for firms in the manufacturing, engineering and R&D space, the situation is rather different. Most of the roles such as design, testing, development have no prior work from home guidelines and firms have had to deal with the unknown in this scenario.
As video calls and teleconferencing on Zoom, Microsoft Teams, etc. grow in popularity, business strategies, products, and standard operating procedures are being reworked successfully remotely.
The need for successful social distancing will also prompt companies to consider optimizing shifts to avoid an overlap of employees between two shifts. Professional sanitation companies may also be deployed at these facilities instead of in-house teams as ensuring the safety of the workforce becomes paramount. The current models of manufacturing will change fundamentally across corporates and manufacturers.
Employees in departments like marketing and sales could also be encouraged to come in on alternate days. As many firms will also find that their customer lifetime value have declined, it would be wise to rein in customer acquisition spending for the time being to maintain consistent returns on marketing spending.
As many health and safety measures are here to stay, firms will have to prepare workers for a completely new standard of operating procedures. While mandatory instructions from the government after the first phase of the lockdown have somewhat eased, firms will be wise to still take measures such as installing thermal scanners and revising the pre-start-up check lists for any machinery with more health indicators included in these. It is vital for firms to create a safe work environment for workers to come back to.
The Insurance Regulatory and Development Authority of India (IRDAI) has also issued a circular instructing that medical insurance for workers will be mandatory for units that resume their activity April 20 onwards. Firms with a basic medical insurance in place for their employees might have to revisit their policies as some of them may not cover the treatment of Coronavirus if it is declared a pandemic. These might be come at a higher cost since medical expenses during the course of treatment, including the treatment during the quarantine period would also be weighed in.
Wherever possible, firms will look at eliminating manual operations and increasing productivity. Introducing automation would increase productivity and give firms more flexibility. While this may affect low-skilled jobs, it will also add jobs for a highly-skilled pool across multiple functions like control systems, IT, cybersecurity, etc.
The forced downtime will also encourage firms to reconsider digitization. The value of digital channels, operations and products is immediately obvious in the current scenario. Just moving from physical systems to a cloud based systems would allow for transforming manufacturing processes and offer new ways to monitor assets, optimize maintenance, reduce costs, and enable the creation of a connected network.
Under the new normal, employee engagement will also have to evolve. While working from home has its own advantages, it can also lead to anxiety and stress in some people who feel lonely and isolated. During the lockdown, firms turned to rolling out virtual engagement programmes, encouraging employees to spend time on training programmes, mental health initiatives, free advisory calls with accredited doctors, and even check-in programmes for employees living alone or far from home. These programmes are expected to continue even post lockdown.
A more pressing challenge, however, is what can firms do to deal with reduced business activity. Business targets would also have to be realistically revised as they had not factored in a global pandemic. The key for now is to conserve cash outflow. Firms will have to review their sources of income and payables. Non-essential expenses will have to be halted to conserve cash. This will include being ultra-sensitive to marketing costs, since consumers are busy with survival and not consumption. Firms will also look at leveraging statutory concessions, negotiating with existing vendors and suppliers, re-examining contracts, converting bonus targets to cash when possible, going slow on capex, and modifying offerings to fit the current situation.
Auto manufacturing companies such as Hero MotorCorp and Tata Motors have halted production and shut down their manufacturing plants across multiple locations. Softbank backed Oyo has indefinitely furloughed thousands of its global employees across countries but did add that it is not considering any job cuts at present. While the Ola Cabs CEO has committed his entire next year’s salary to a fund set up by Ola to support the drivers and their families.
By now companies would have been able to map out and plug any deficiencies caused by various factors such as labour shortages, lack of infrastructure, external environment issues or timelines of action. To overcome the challenge of supply gaps that affected almost all sectors, localization will also see a push to avoid a repeat of the business coming to a standstill. Firms will also have to update and introduce their internal guidelines based on the lessons from the lockdown and also relook at their contingency plans to respond to future crises.
A crisis is also an opportunity. During the course of the lockdown, firms have experienced many new and unique situations. Those firms which draw insights from the lessons learned and build appropriate strategies could emerge with competitive advantages and be future ready. The Coronavirus pandemic is extraordinary and unprecedented for our generation. How quickly we in India and the rest of the world recover from it is yet to be seen. Till then, stay safe and take care.
About AVA Chemicals
AVA Chemicals is a globally renowned company engaged in formulation and supply of premium-grade chemicals to diverse industries such as Pharmaceutical & Lab Reagents, Agrochemicals, Home & Personal Care, Oil & Gas, Coatings, Water Treatment and many more. Over the last two decades, AVA Chemicals set-up three state-of-the-art Facilities (ISO , HALAL & KOSHER certified) in Badlapur MIDC, Thane, India with a strong Clientele presence in over 50countries.
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