After the great disruption in supply chains brought about by the Covid-19 pandemic and the subsequent Movement Control Order (MCO), companies should look at going local for supplies and manufacturing, says Anish Kanaran, Sage Asia regional enterprise resource planning (ERP) sales director.
“We foresee a few things in the near term. For starters, we think there will be a shift in demand which might lead to unutilised capacities that can be sourced locally. We also expect to see governments supporting indigenous manufacturing with subsidies to encourage local manufacturing and create employment. Private sector companies are doing this as social enterprises,” he tells Enterprise.
Anish says that while cutting costs is now akin to a religious norm for all companies, they should not neglect their cash flow and budgets. “Redo your budgets with new assumptions of cash flow, in light of the trends you have seen during this period. Prepare a cash flow forecast, and update it every few days.
“With this new insight, you will have early warnings and can act swiftly to address them,” he says.
Anish also advises companies to utilise all available financial assistance, even if it only covers a small percentage of their costs. “Every ringgit counts.”
Also, he says, companies should reduce prices if it means they can move their stock. “Diversify product lines if you have been a one- or two-product shop. Offer timely delivery. Innovate.”
Anish says if a company finds its business in dire straits at the moment, it needs to look at short-term solutions to “keep the lights on”.
“Where possible, transition to a product that has spiked in demand as a short-term recovery plan. Take opportunity in demands that cannot be fulfilled in specific areas, more than others but be quick to get in first.”
Most importantly, companies need to go online. “Put in place affordable on-cloud technology solutions to quickly and efficiently reach the right audience and run your business effectively. Keep it simple and move fast.”
He gives an example of a favourite sandwich shop that now sells the supplies it uses to make these sandwiches because home cooking is on the rise, and besides, it has a preferential relationship with the suppliers of these ingredients.
“However, this temporary measure may not have much of the businesses core DNA and hence should not be a long-term solution,” he cautions.
Another possible stopgap solution to survive is to sell subscription models for items that customers may regularly consume. “A café started to sell a very attractive monthly subscription package, delivering freshly roasted coffee beans to be every Monday. I need my coffee fix even if I can’t get out, so this was perfect. Something like this could be continued even after Covid-19, as it’s still very relevant to the core business.”
What about the technology component to deal with supply chain problems? “You need to digitalise your supply chain. The pandemic has demonstrated how essential it is for all companies to obtain more visibility to the supply chain in real time from a supply and demand perspective.”
Anish says technology such as ERP applications, integrating all the facets of a company as well as connecting customers and suppliers has never been more important. “It helps businesses identify supply chain exposure and manage or mitigate risks.
“In this connected supplier environment, the impact of disruption is greatly reduced,” he adds.
Anish says next generation ERPs can be implemented in a short period of time, from as little as four weeks while the finance and distribution modules can be implemented in just two weeks.
“Smaller SMEs can also consider an affordable Cloud ERP solution with a fast-track implementation programme. An ERP solution provides agility for the organisation and a platform for futureproofing the business, an option all today’s businesses need.”