This is a follow up article to “Strategizing in Sri Lanka During Global Disruption” published in Linked In on the 3rd of April 2020. (https://www.linkedin.com/pulse/strategizing-sri-lanka-during-global-disruption-wickremesinghe/ ). In that article I discuss about re-strategizing and in this article, I will discuss the challenges in restarting your business as well as suggest operational strategies and tactics you may adopt to overcome specific challenges.
Business leaders will have to be mindful of the fact that the pandemic has brought the income disparity and inequality back to center stage. The public is highly sensitive to unethical pricing and profiteering by all those who are engaged in commercial activities. In this new post pandemic world, such attempts will be exposed on social media and can go viral to the detriment of the business. Therefore, businesses with a strong sense of values and standards will do better than those that do not.
The first challenge will be to identify the nature and status of your customers. In this regard your customers will fall in to the following three broad categories.
Category I
- Preferred customers who will want a discount for settling bills on COD basis
- New customers who will want a discount for settling bills on COD basis
- Preferred customers who are willing to change the payment terms to COD basis without seeking an extra discount
- New customers who are willing settle on a COD basis without seeking an extra discount
Category II
- Preferred customers who will want to operate with the pre-pandemic terms and conditions (Credit terms and payment terms)
- New customers who will want to operate with the pre-pandemic terms and conditions (Credit terms and payment terms)
Category III
- Customers who have outstanding invoices from going concerns who are not able to settle on time, (Bad Debt) which prevents them from settling their suppliers
- Above customers with access to external funding or investment (Well run businesses) who must contend with investor risk averseness at the present time.
- Above customers with no access to any external funds for operations (Poorly run businesses where the funding agencies would not lend or invest)
- Above customers that have or are going bankrupt (Need legal action to recover dues)
One of the main issues that a business will have to overcome will be the inertia within the economic system. The best way to overcome this will be to initially focus on Category I type of customers. To access these types of customers business may have to adopt new channels (including on-line). This way you can get your business rolling and create your own momentum. This would require a significant effort on the part of sales and new business development. This will have to be driven by the CEO / MD to make it a success. Leadership in this regard will be critical to success. Quick decision making and making win-win deals will be the order of the day.
Of course, this will also provide an opportunity for unethical / unscrupulous businesses to increase the price or put a premium on goods and services and sell to the highest bidder with the most cash. This however is not what will bring you long term sustainability. Businesses that stick to their values and principles will be remembered and patronized over the post pandemic years and those who take advantage will be shunned by consumers the world over.
The adage “Cash is king” will hold true in the new post pandemic paradigm. Now it can be re-written as “Cash and Cash equivalent is King”. Yes, other methods of instant payment without actual cash will also take off in this new era. Businesses need to adopt all available payment methods to receive payment instantly to avoid losing customers. In my book “How small countries can compete and grow – a case for Sri Lanka” (https://www.facebook.com/How2Compete/) published in 2016, I advocate the setting up of a national common ATM network to cover all villages in Sri Lanka. Such a network would have increased the access to cash by the entire population. The absence of such a network is still an opportunity for a smart business to fulfill this void.
The second challenge will be your workforce. Within this, the first hurdle will be that, workers in all areas will want to find jobs within their own districts. There will be a strong perception of safety within the districts that were not touched by COVID 19. The second hurdle will be that employers and employees who can work from home will want to continue working from home (provided that same or better productivity can be achieved at an equal or lower cost). These will be the post pandemic employment preference. In both instances employees who are required to travel inter-district will be at a distinct disadvantage as the appetite for money over hardship will change to health, wellbeing and convenience over money. The biggest influencers of our young workers are still their parents (elders). Their need to have their family safe and within reach will override the desire to travel and risk one’s safety on the hopes of marginal increase in wealth. This will affect the female workers more than their male counterparts along with significant pressure to marry and have children. Therefore, the cost of employees who are required to travel inter-districts will ask for significant higher wages.
For businesses that have multiple locations and or factories this will require a reshuffling of staff to ensure that most stay within the district or close to their homes. This phenomenon will have a negative impact on the demand for inter-district travel, lodgings such as hostels and chummeries and related services to these businesses. Along with this, there may also be a movement of somebusinessoperations out of the highly populated (current COVID19 Hot Spots) districts that are perceived to be at a higher risk for such an event. This will result in semi urban and or rural revival in some districts causing our national GDP to spread further out of the western province and reducing the national economic risk.
The third challenge you will face will be your supply chain. It is quite clear that the slightest stress on the supply chain will negate just in time (JIT) production. Businesses that import raw material and or services for operations will have to rethink JIT to enable them to continue production, operations even with a significant disruption to its supply chain. This may lead to the evolution of the JIT system to a more nodal system such as shown below. In the new paradigm, it may become impossible to sell globally without some form of local presence to ensure continuity of supply during future disruptions.
The current JIT system
Raw material manufacturer > Storage/Warehousing > Shipping > Customs > Trucking > Goods manufacturing factory
Possible new JIT system
Raw material manufacturer > Shipping > Customs > Trucking > Multiple country and or regional bonded warehouses > Goods manufacturing factory
The question of who pays for what costs will have to be negotiated in this new paradigm. For those who rely on local suppliers of products and services will see it prudent to contract locally with district suppliers. Sourcing and procurement managers will focus more on risk reduction during disruption to ensure continuity of production. The same can be said for the postproduction distribution system. Here too, a distributed nodal system will ensure little or no disruption to deliveries, be it to retail or end consumer. Distribution managers will have to ensure continuous filling of the channels to enable uninterrupted product / service availability.
The fourth challenge will be access to products and services. Here, due to social distancing “shop windows” will need to be open for longer hours to ensure customers have access. In some cases, this need could be fulfilled by going on-line. For others, you may need to accommodate physical access during off peak hours. This may lead to the need of part time employees to serve customers during off peak hours. This need has the potential to create a whole new plethora of part time jobs.
Your success in the new paradigm may depend entirely on how you overcome these challenges.
Copyright © Roshanga Wickremesinghe 2020.
The writer is the chief strategist at R & R Associates Consulting. A sector independent strategy consulting practice. If you have any specific questions regarding your own business, please contact me directly via email roshanga@consultinglanka.com or by phone +94 77 774 5600 for a no obligation chat.
21st April 2020.