Recovery During Lockdown


What your recovery will look like, and how to start now

David Iwinski Jr.

Managing Director

david.iwinski@bluewatergrowth.com.

AUTHOR

Thomas-Watson-wpcf_153x190.jpg

Thomas Watson

Director, Senior Consultant

Blue Water Growth

thomas.watson@bluewatergrowth.com

US Mobile: +1 412-398-4639

​Skype: thomas.watson-bluewatergrowth

Recovery During Lockdown

What your recovery will look like, and how to start now

By Thomas Watson

 

The key to surviving and possibly thriving in the future is to act now based on the best available information, then to collect information and reevaluate your activities to meet demand, address constraints, and adjust to a fluid situation. Few companies have the cash and manpower reserves of an Amazon or Google, so your future will depend on how effectively you and manage your resources in your unique situation. Key interrelated areas in which to balance your time and financial resources are customer demand, critical supplier performance, operation execution, and project management. In these areas, what can you do now, with shutdowns still in effect?

Customers
 

  • Contact your key customers, determine what they expect to need, and reconnect frequently.
     

  • Assure key customers you will be there for them, but be honest and realistic on how you are identifying and addressing challenges.
     

  • Determine how to protect key customers through allocation or preferential treatment.
     

  • Identify and develop a strategy to address customers with known credit risks or slow payment history.
     

  • Discuss ways to counter actions that may be taken by your competitors.


Will you be prepared for future demand, high or low? What can you do to influence this? Contact as many customers as possible to let them know your approach to support them down the road. If you are a B2B business, your customers may be making alternate supply arrangements, and you want them to know you will be there to meet their needs. Here, knowledge is power, so develop a consistent approach to information-gathering to improve your plan. Key customers likely have multiple points of contact; use all of these to get a better picture of their situation, and routinely reconnect to be aware of the changing landscape.

Who are your competitors and what are they likely to do?  Anticipate threats from them to your major customers and consider countermeasures.  You may be able to capture weak competitors’ market share. If you are financially sound and have been considering acquisitions, now could be the right time to be a lifeline for a struggling competitor or complementary product line. If you have constraints, consider discontinuing non-strategic products or services.

Supply Chain
 

  • Identify and contact critical suppliers to determine their ability to support you.
     

  • Buy inventory or capacity for the products or services that you expect to need.
     

  • Determine if you have critical tools or intellectual property that you need to duplicate or acquire from a supplier in jeopardy.
     

  • Stay in close contact to look for red flags and revise your plans to match shifting needs.
     

  • Analyze less critical supplies and services, and identify secondary sources and potential for disruptions that could impact you.
     

  • Delay payments and look for favorable terms to conserve cash where possible.


Focus on your short term needs, but take notes on the challenges that may change your long-term supply strategy.  Does your stock include long lead times or critical sole-sourced items? Stay in close contact with critical suppliers to understand their plans. Place orders for sole-sourced or difficult to source items and expect delivery disruptions. It is not the time to play hardball on terms with key suppliers. If you have concerns that your competitors will take needed capacity or stock that could create a shortage, be aggressive and give them commitments or even cash to corner the inventory.  For less critical goods and materials with multiple sources, you can negotiate more favorable payment terms to conserve cash.  

Production and Operations

  • Communicate with employees weekly.
     

  • Identify key employees and skills required to restore vital operations and develop a plan to retain them or set up training alternatives.  
     

  • Perform maintenance on equipment likely to be needed and protect equipment that will be shut down for extended times.
     

  • Develop an efficient plan for startup, considering constraints on materials or people.
     

  • Create a technological strategy and a communication strategy for ongoing remote work.
     

  • Take full advantage of existing lines of credit and work with banks and landlords to delay payments to conserve cash.
     

  • Decide what not to do!


The four M’s in a lean system are Material, Machine, Man, and Methods.  Based on your demand projections and material availabilities, what manpower will you need? Take advantage of available government sponsored assistance to retain your employees, so you will have the skills and capacity to ramp up quickly. This is the reason for the assistance and your challenge is to deploy this human capital effectively.  


Expect supply chain and customer order disruptions and create alternative plans to keep your employees productive. Conduct preventative maintenance, push up planned shutdowns, accelerate critical projects, build strategic inventory, update standard operating procedures, and use kaizens to improve methods. Turn this disruption into future advantages.  


Employees may not return to work promptly. The shutdown may be extended, and many employees may be in high-risk health categories. Prepare for a longer period of remote work by putting in place the technology to support it, including VPNs, file sharing tools, messaging tools and teleconference platforms. Do not allow your employees to waste time wondering how to do this – make it easy for them. Support these tools with a systematic communication strategy. It is easier for remote workers to lose touch with their teams and wander off-task. Use frequent, scheduled communications to touch base and encourage team cohesion.


If your constraints require significant layoffs, your challenge is to retain your key skills until they are needed.  Overcommunication with your employees can never hurt, even if it is not good news.  Create or update a skills matrix and develop a strategy to keep the key employees needed to work or train others. Make tough decisions and discontinue unprofitable activities that do not support restoring your customer base.  

Project Management

 

  • Revisit the requirements and assumptions for projects left mid-stream.
     

  • Evaluate each end market to verify that the need remains and the customer base is large enough to viably serve.
     

  • Revise ongoing project schedules in light of new information and constraints.
     

  • Analyze your rejected projects to see if any of them are feasible in the new market conditions.


Do not plan to continue project work on autopilot when coming out of the shutdown. Take a systematic approach to re-evaluating your projects. Take time to go through an abbreviated evaluation process, similar to when each project was previously approved. Consider the project’s critical requirements and assumptions. Have these changed during the shutdown, and are there new requirements driven by the quarantine, or the virus itself?

Re-evaluate your end markets. The market you will come back to after the shutdown may not be the same market. Will your projects still be a fit? To make informed decisions, you will need to know the impact on your customers. It is key to revisit the financials and validate that the return on investment will remain intact.

Look for opportunity, including your previously rejected projects. For example, low interest rates may make some projects more attractive. Firms will go out of business, potentially leaving some markets more poorly served. Some markets will grow and new markets will emerge as a result of societal changes engendered by the pandemic. Working remotely is likely to be more prominent. Certain types of sanitation products will be in greater demand, and new ones will be created.

 


Revisiting the balance of market demand, upstream supply, materials on hand and manpower available is crucial in the days to come. Whenever in-person business is legally back in operation for your geographical area, should that come as early as next week or be pushed back another month, there are many options to stay alive now and set your business up for a successful reopening. Identifying opportunities and challenges quickly and adjusting your plans accordingly will improve outcomes regardless of your unique circumstances and may even lead to competitive advantages for the future.

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