This is a challenging time for the consumer goods industry as COVID-19 accelerates the pace of change. While no one can predict how long the crisis will last, it is unlikely we will be going back to the world as we know it.
Unsurprisingly, many consumers have migrated to online channels. In many segments these are likely to be the only viable sales channels in the near term. But demand is highly variable. Where some categories such as food and pet supplies are seeing massive surges, others such as fashion are being hit hard.
While consumers are reacting to the emergency in different ways, changes in consumption—that will likely be long-lasting—are emerging. Consumers are seeking enduring value in products and experiences that are more healthy, trustworthy, environmentally sensitive and supportive of the communities in which they live and work. So how can leaders navigate what’s needed now and in the near future?
The COVID-19 crisis is accelerating immense structural changes in the consumer goods industry. And while the scale and breadth of the challenges can seem overwhelming, the crisis calls on consumer goods leaders to address three key needs simultaneously. The first is the near-term need to respond urgently to protect the business and the communities it serves for the duration of the pandemic. The second is to reset relationships and ways of working, adapting the business to what may be a very different set of consumer, customer and worker priorities on the other side. The third is a longer-term need to renew and scale operations to support a post COVID-19 business model for a future marked by growth and resilience.
How to Respond Now
Most consumer goods companies have never seen their supply chains disrupted to this degree before. We have been advising clients to create a cross-functional “command center” to manage the crisis. Task this unit with continuously tracking key performance indicators to understand what is driving the disruption, who is affected, which external stakeholders they should be working with, and how to respond quickly and effectively to stabilize the business, protect workers and support communities.
It is essential to get end-to-end visibility in close to real time (using tools such as a supply chain “control tower”). It is also crucial to expand the supply chain risk framework, coordinating and strengthening the supply base, and enable manufacturing to be relocated more easily. This is a significant challenge, but it is also an opportunity to identify previously hidden weaknesses and rethink the resilience and agility of the whole supply chain.
Look After Your People
This is a time people will be looking to the company to support them in adapting to unfamiliar and often highly stressful working environments. Where needed, show flexibility and look to support people’s emotional needs as well as their physical safety. And recognize the importance of brand purpose in inspiring workers with a stable connection to something bigger than their immediate challenges.
The sudden shift to widespread remote working means companies must ensure remote workers have the digital and collaboration tools they need and urgently review their network effectiveness and security profile. Consider actions such as distributing secure networking hardware to workers where appropriate.
Prepare for the New Normal
The crisis will pass in time, and economies will rebound to a new normal. It is therefore vital to keep planning for the capabilities that will be needed in the post-pandemic world. That includes closely monitoring the different consumer patterns, behaviors and channel preferences established during the emergency. It also includes thinking about how to reset and repurpose both operations and workforces for those different consumer needs while increasing flexibility through capabilities such as third-party manufacturing and logistics.
The business will need funds for these investments. Finance will have a key role to play in preserving cash in the difficult months to come. Identify cash collection risks and look for opportunities to optimize costs and payment terms. Reprioritize investments for the post-pandemic era with an overarching objective of renewing the business model and shifting to intelligent, data-driven operations. Where possible, scan the market for M&A opportunities to support longer-term growth plans.
Virtually every aspect of the consumer goods business is being put to the test. Those organizations that are most adaptable to change that will be best positioned to ride out the disruption and help both their businesses and their societies come through stronger.
Oliver Wright is managing director and the global lead for the Consumer Goods and Services practice at Accenture.
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