Businesses with extensive presence in or direct ties to affected areas must take immediate actions to assess organizational exposure, positioning them to appropriately support key stakeholders, employees and customers.
Safeguard people and customers
- Leverage HR expertise to maintain employees’ physical and mental well-being, providing guidance to employees located in impacted areas and reassessing organization-wide travel policies.
- Exercise best-in-practice corporate social responsibility regarding employee stability, environment, wider society and economy, pursuing ways to support response efforts.
- Develop a back-up plan for impacted staff that may include contingencies for more automation, remote-working arrangements, or other flexible resourcing in response to personnel constraints.
- Leverage available internal and external technology to aid collaboration and equip employees with necessary tools to work remotely both in affected areas and with individuals in affected areas as seamlessly as possible.
- Assign high-risk weighting to customers from less prepared countries and those critical to response efforts (i.e. hospitals), thereby prioritizing scarce capacity.
- Be cautious about proper pricing of essential goods, such as hand sanitizer and face masks, during the crisis period. Competition Authorities are taking a closer watch at companies charging unfairly.1
Assess supplier risk
- Create a crisis response team to facilitate the open and consistent flow of accurate information between key stakeholders, maintaining stakeholder confidence and informing customers who will be impacted.
- Establish a team to focus on supply chain assessment and risk management. This team can work to reconfigure global and regional supply chain flows, where possible, utilizing alternative modes of transportation and conducting trade-offs according to needs, cost, service and risk scenario analysis of all viable options.
- Map criticality of sourced materials to high-value products and revenue streams. Identify the components and raw materials that have the highest impact on revenue streams, helping to ensure scarce capacity is allocated wisely.
- Review contracts with key customers and suppliers to understand liability in the event of supply shortage.
- Determine exposure by identifying current and buffer inventory, building tier-transparency and short-term action plans.
- Conduct a value chain assessment of other risk factors that may escalate costs (i.e. transportation shortages may increase cost, as transport companies see an opportunity to raise margins) and impact service and inventory capabilities, taking proactive action to address anticipated shortages, such as possibly pre-booking freight.
- Aggressively evaluate near-shore options as potential backup to shorten supply chains by increasing proximity to customers.
Manage working capital & business plans
- Revise cash flow, working capital management and inventory forecasts alongside supply and demand predictions.
- Understand how financial stability may be impacted from further stock market declines and restrictions in access to funding.
- Review organization-wide Sales & Operations Planning and Integrated Business Plans to help ensure tactical and strategic business planning is synchronized among all business functions.
- Businesses with data rich environments can harness capabilities in procurement, operations and R&D, using advanced simulations to help identify optimum performance trade-offs in the current crisis.
Footnote: 1 Coronavirus: Retailers warned not to ‘exploit’ consumers’ fears, 5 March 2020, BBC News
Partner, Head of KPMG Law, Head of Infrastructure
KPMG in Vietnam
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