What leaders should do to ensure continuity during this unprecedented crisis?
It is expected that post-lockdown, most of the companies in the wood panel and interior infrastructure domain will need to shift gears. Since this sort of a crisis is unprecedented, the need of the hour is survival and sustainable strategies. It is hard to predict what will emerge post-lockdown; therefore, scenario and contingency planning have to be kept ready in equal measure.
While there’s no doubt the crisis will not be at the supply side, it is apparent that there will be a fall in consumption, albeit for a few months.
People are genuinely scared of the Coronavirus, and in this suspenseful hour of shutdown only those will come out strong who introspect, reflect, review in detail, and take corrective action at all fronts – operations, finance, inventory, marketing, HR, sales, etc.
The lockdown has forced many daily wage carpenters, especially the migrating ones employed by contractors and other furniture OEMs, to return to their respective villages. Few of the trade partners that I have spoken to are optimistic and hope to witness a demand pickup after the lockdown gets lifted. However, they opine that meaningful recovery would happen only after 1-2 months, as the return of carpenters is certainly not in sight immediately.
At the macro level, the government will need to take steps to stimulate spending. Few such steps could be GST rate review and reduction, interest rate reduction for home loans (at least 150-200 basis points – 1.5-2.0%), and liberal bank lending.
So, what do we do in this scenario?
We need an expert team to do scenario-planning, keeping in mind safety of the teams at the top.
The 1st step would be to keep the team engaged through video conferences, con-calls, Zoom calls, etc. The agenda could be:
- On-line training
- Annual appraisal of teams
- Preparing and reviewing their annual operating plans
Next would be to:
- Connect with the trade partners and other stakeholders digitally; share one’s preparedness post-lockdown and current year’s business plans. Also, use this time to connect emotionally with them.
- Take time to reach out to those trade partners who have stopped transactions. The objective is not only to retain customers but also wean away a few from the competitors.
- Finally, once work resumes, adequate precautions need to be taken to avoid liquidity shock. A hurry to liquidate piled-up stock and resume sales will be perilous if the receivables are not controlled smartly. Cash flow is always critical, but at this juncture its priceless. Working capital management will separate men from the boys. Fiscally undisciplined companies will face sustainability issues.
There will be a need to reset plans for FY21 with new objectives, budgets, forecasts and operational plans.
The key review and action plans would include:
- Review of customer and market data to identify areas where the company gained or lost market share pre-lockdown.
- Determining how the company’s top 20% contributing customers fared during the lockdown, and identifying priority action accordingly.
- Developing commercial revitalisation plans to reactivate demand.
- Evaluating continuous cost improvement across all functions and all divisions.
Few business leaders can dare to forecast the outcome of this pandemic with accuracy. However, companies need to quickly roll out contingency plans to face the crisis head-on and ensure business continuity.
This is a surely a defining moment of leadership!!
The author is Subir Palit, an alumnus of BIT Mesra and IIM-C. He is a motivational speaker, and ccurrently country head at GreenPly Industries. He has over three decades of diverse industry experience in senior leadership positions and at startups.