In our last blog post, we discussed the toughest leadership test is to discover how to bring a business back in an environment where a vaccine has not been found, and economies are still uncertain. And identified the four strategic areas to focus on are: recovering revenue, reconsidering the organizational structure, reforming operations, and accelerating the adoption of digital solutions. In part two of this discussion, we are focusing on Reforming Operations.
The coronavirus pandemic has drastically changed demand patterns for products and services across segments while exposing points of instability in supply chains and service networks. At the same time, it has been remarkable how fast many companies have adapted, creating deep-seated levels of reflectivity, agility, productivity, and customer connectivity. The question leaders are asking now is: How can we sustain this performance? Operations experts and leaders are seeking to reinvent the way operations works and thus position themselves as ready for the next normal; fivepremises are emerging.
Building operations resilience:
Redesign the operations and supply chains to protect against a broader and more severe array of potential shocks is vital to success. Also, companies have to act quickly to rebalance their global supplier mix. The once-dominant global-sourcing model in product-driven value chains has increasingly declined as new technologies, and consumer-demand patterns encourage regionalization of the supply chain. In the current global climate, this trend will continue to increase.
This reinvention and regionalization of value chains are also likely to accelerate the adoption of other controls to strengthen operational resilience. This change may include increased use of external suppliers to supplement internal operations, greater workforce cross-training, and dual or even triple sourcing.
Accelerating the value-chain digitization:
Itis expensive to create this new level of operations resilience in both time and resources. The good news is that leading pioneersin the 4th generation industry revolution have demonstrated how a suite of digital and analytics tools and approaches can significantly reduce the cost of flexibility. In short, low-cost,Flexible operationsare not only possible; they are easier to create than ever before. Many companies were already digitizing their operations in part or whole before the CODID-19 hit. Now they need to accelerate these efforts so they will likely see substantial benefits in productivity, flexibility, quality, and end-customer connectivity.
Quickly aggregating capital and operating-expense transparency:
To survive and thrive during the economic fallout, companies can build their next-normal operations around an overhauled approach to spending. A full suite of technology-enabled tools is accelerating cost transparency, condensing months of effort into weeks or days. These digital approaches include capital-spend diagnostics, portfolio rationalization, procurement-spend analysis and clean-sheeting, and end-to-end inventory rebalancing. Companies are also needing to turn fixed capital costs into variable ones by leveraging “anything as a service” (XaaS) models.
Embracing the imminent change in how work is done:
Automation and technology had gradually changed the future of work; COVID-19 has increased the pace. For example, organizations and employees across all functions have learned how to get the job done remotely, using digital communication and collaboration tools. In operations, changes will be more prevalent, with an accelerated drop in manual and repetitive tasks and an upsurge in need of analytical and technical support. This shift will call for considerable investment in workforce engagement and training in new skills, mostly delivered using digital tools.
Envisioning sustainable operations as a competitive advantage:
Remarkable shifts in industry structure, customer expectations and behavior, and demand and patterns create a need for similarly notable changes in operations strategies to create new customer value propositions and competitive advantage. Successful companies will reinvent the role of operations in their organization, creating new value through far greater responsiveness to their customers. This reinvention may include accelerated product-development and customer-experience innovation, mass customization, improved environmental sustainability, and more interconnected, agile ecosystem management.
To keep up during COVID-19, companies have totake action and move fast. Sales and operation planning used to be done weekly or even monthly; now, a daily pulse is frequent. Speed and urgency continue to be the essence in build on this progress. Companies that recognize this, and that are willing to set new standards and overturn old paradigms, will build a long-term strategic advantage.