In response to COVID-19, companies had to pivot operations practically overnight to meet guidelines imposed by governments around the world. Now that markets are starting to open again, their immediate response is ending and a new phase is just beginning. In many ways, this new phase may prove to be even more challenging than what went before.   

Now is the time to reinvent businesses so that they’re stronger, more efficient and more resilient than ever to face whatever an unpredictable future may throw at them. 

As they make their plans, companies need to bear in mind some guiding principles.  

  • Address and accept uncertainty as a constant condition. That means being prepared to change course quickly. Any plans they make must be easily reversible and scalable as business environments are disrupted.  
  • Prioritize the safety of their workforce, suppliers and customers. It’s essential to address people’s concerns about returning to work after such an extended period at home, as well as taking all possible steps to safeguard participants at every stage of the supply chain.  
  • Actively avoid easy reversion to the past. Some ways of working that have emerged over the pandemic may prove to be preferable to employees in the longer term, as well as benefiting the business. Working from home has, for example, resulted in increased job satisfaction for many over the past few months. And a happier workforce is more productive. This underlines how lessons learned during the pandemic can offer a real opportunity for business transformation that benefits businesses and the people they employ. 

Business as usual is a thing of the past

Financial priorities are going to shift rapidly over the coming months. Today’s preoccupation with confronting existential threats to business operations, keeping supply chains open, protecting market share and preserving liquidity is moving into a new phase. The focus for most companies will revert to controlling costs and maximizing profitability. And as the immediate threat posed by the pandemic recedes, organizations will emerge into a new world where enterprise value must be grown in a “never normal” environment in which business as usual is a thing of the past.   
 
The immediate need for CFOs, CPOs and CSCOs? To reset budgets and, where necessary, reinvent operations so they can ensure business continuity, optimize supply chains, and enhance risk management. Crucially too, they need to control spending so that they can unlock cash to support whatever comes next for their business. Seeking cost efficiencies and operational improvements is an exercise which should leave no stone unturned. Every category of spend should be in scope and no category should be exempt from intense scrutiny in order to surface opportunities to save, streamline, optimize and, where possible, negotiate with suppliers to secure better prices. 

Opportunities to build new competencies

The pandemic has created opportunities for many companies to build the competencies they wish they’d invested in before: becoming more digital, agile, data-driven, and in the cloud. Take marketing for example. The massive shift to online channels by consumers, employees, companies and governments creates an outstanding opportunity to shift into new advertising channels that are not only more effective, but also more cost-efficient than what went before. Or what about companies’ suppliers? What have the impacts of the past few months been on their businesses and will this provide leverage for new relationships and costs structures? 
  
Similar arguments can apply to IT, travel, facilities and so on. The point is that today companies have a unique opportunity to reimagine their cost-bases and operations from the ground up. To help organizations take advantage, we’ve developed a comprehensive and detailed approach for identifying and capturing these new (post-) crisis opportunities.

Bending the curve

We call this approach “bending the curve”. This means using the post-pandemic budgeting reset as an opportunity to identify where areas of discretionary spend can be reduced (or stopped altogether), and baking this dynamic allocation of resources into operations so funds are freed up for future intelligent investment. The goal? Establishing stability, identifying next-best actions (according to scenarios encountered) and calibrating SG&A investments to the new “never normal” world. 
 
Our approach recognizes that, from now on, spend in some categories can confidently be expected to drop (travel and events, for example), while in others, increases look inevitable, whether that means more investment in must-have technology solutions or greater demand for outsourced services. Meanwhile, in a few categories, such as maintenance and financial services, there are likely to be minimal changes.

Rebuilding from the ground up

At this point, budgets in most businesses will already have been severely cut and operations placed under extreme pressure. Now there’s an urgent need to rebuild from the bottom up, considering changing customer needs, the likelihood of different recovery scenarios and new ways of working in the post-COVID era. In my next blog in this series I’m going to deep-dive into some specific services and operations categories, and show how our approach can deliver real value by dynamically fine-tuning category spend for the never normal. 

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Stephen Broadbent

Principal Director, Procurement Services, North America

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