Resilience steps in times of pandemics
At this moment, we in Albania stand in a disrupted business climate mainly because of the unknown we face ahead of us. As we have entered the fight to prevent the spread of COVID-19 with harsh but very important measures of quarantine and staying at home, this is impactful to the country’s economy. Thus, it is a social responsibility of enterprises to conduct business in new ways never seen before in Albania and mitigate some of the negative impact on the country’s economic climate and health.
Enterprises could face various risks, such as delayed or interrupted supplies of raw materials, changes in customer demand, cost increases, logistics shortages leading to delays in delivery, employee health and safety protection issues, insufficient labour force, cash flow difficulties and financial health issues and even temporary shutdown that may disrupt business and pose future risks.
However unknown this situation, we can gain insight from Asia’s economies from recent past. We can analyse the effects and responses to other great epidemics such as SARS, MERS and different influenza outbreaks such as swine or aviary flu and come up with some most important initiatives in case of such situation that would greatly help enterprises overcome difficulties.
Most probably the ways of work will be forever changed after this pandemic so it is imperative for a healthy economy that we brace change in a way to overcome this situation but not only, also be better prepared for what the future holds in store.
Deloitte China analysis of leading practices of companies in Business Continuity Planning, emergency and major emergency management of similar cases, has concluded with some of the most important initiatives for enterprises in China. However, our Deloitte Albania Consulting team has summarized and adapted the key initiatives that are relevant to Albania as well.
For the full Deloitte China report please follow the link: https://www2.deloitte.com/cn/en/pages/risk/articles/ten-things-firms-to-do-in-2019-ncov.html#
1. Establish emergency teams or committee.
Enterprises should act quickly to set up emergency teams to build objectives and emergency plans as soon as possible. These teams should coordinate with measures that the company must take to overcome emergencies.
It is important that these teams be comprised of professionals as per the enterprise business units and geographic characteristics.
2. Assess the risks and clarify emergency response mechanisms, plans and division of labour.
From past events, many multinational companies have had established emergency contingency plans or sustainability plans in case of such occurrences. This is to serve as a lesson learned for the future; however, there is something that can be done even in case no such measures were already in place. Even local companies may learn from that and adapt to their benefit plans that have worked for others.
Companies not having such plans should analyse risks regarding workforce, operations, government, supply chain, financial risks, local/national market and respond with adequate emergency plans.
3. Establish a positive information communication mechanism for employees, customers and suppliers, and create standardized communication documentation.
In such emergencies, communication plays a crucial role.
Internal communication with employees should create a positive climate of support and at the same time risk awareness to the epidemic.
External communication with suppliers, investors and financial institutions is crucial for supply chain and cash flow planning. Cooperation between parties is important to overcome financial difficulties.
Communication with the client base should serve several purposes. Better demand planning will benefit cash flow plans, understanding of customer segments will benefit production shift to more short-term profitable business models and social responsibilities will improve public opinion.
4. Maintain the physical and mental wellbeing of employees, and analyse the nature of different businesses and jobs to ensure appropriate resumption of work.
Flexible work arrangements have been a novelty in the Albanian labour market. Now it is the time to start shifting focus on that new way of work out of necessity but also as a future means of efficiency and work benefits. Support operations such as finance, HR, IT, back offices are the first most adaptable functions to pilot flexible work-from-home.
Establishing flexible vacation and work, staff health monitoring, epidemic safety education and safety of environments cleaned and disinfected is crucial for ongoing business operations.
5. Focus on supply chain risk response plans.
In such situations, choice and diversity of suppliers is crucial. However in the state that all the country is affected and besides that all the major countries with which we have trade relations, local measures should be taken.
Companies that cannot or have not done prior the diversification of suppliers, are advised to review planning in coordination with their suppliers so that coordinated measures can improve supply chain operations and limit “surprises” in lack of product or logistics.
In terms of inventory, companies should think differently. Emergency plans should consider the effects of demand in the inventory cycle. Cash management should be primary before margins management. However, industries with long production cycle or long inventory cycle, might consider preparing in advance for the rebound in consumption after epidemics end.
Product/service shifts may be beneficial to supply chain operations continuity as well as cash generation. Shifting to new products/services that are important during this crisis can not only secure short term stability, but also provide a new revenue stream and business model in the future.
6. Develop solutions to compliance and customer relationship maintenance risks arising from the inability to resume production in the short term.
Enterprises should cooperate with customers to understand how the market is changing. This is crucial not only during the crisis, but also after business will resume operations.
Also laws regulating civil and commercial contracts should be reviewed to mitigate the risk of any legal consequences even in extraordinary cases such as the epidemic. Contracts that may be affected should be identified and the company should promptly communicate with the related parties for coordination.
7. Build management plan of employee master data, information security and privacy.
To ensure communications, employee, suppliers, partners master data management is important. Through that, information on response actions and plans can be more efficiently transferred. Privacy protection as well should be a priority especially when handling health and medical data.
8. Companies need to consider adjusting their budgets and implementation plans, cash flow plans, and early warning mechanisms for international trade.
We would advise companies to pay attention to cash flow, arrange cash scheduling to ensure the safety of funds according to the rhythm of upstream and downstream suppliers and employees' work plans.
Companies working with international suppliers should pay particular attention to developments and possible risks. Emergency scenarios should be established and plans to protect from possible losses.
9. Upgrade enterprise's risk management mechanisms.
Enterprises should establish or upgrade their risk management systems to identify the key risks and build risk mitigation plan. Strengthening risk management system is just as important as dealing with negative events when they arise.
Enterprises should design risk functions with relevant manuals and pre-tests based on emergency scenarios and simulations. This will greatly enhance their ability to respond effectively in case of major emergencies.