This is the first time in modern history that we have experienced a global recession that was triggered by a public health crisis. “The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be,” says International Monetary Fund Managing Director Kristalina Georgieva. She adds that, in order to recover in 2021, countries must prioritize containment and strengthening health systems.
Jay Shambaugh of The Brookings Institute agrees, noting: “While there are always problems in any economy, there was nothing fundamentally wrong in the economy that triggered this recession — no asset bubble popping or runaway inflation to be stopped. The shock is from outside the economy, and if the health shock can be controlled, good policy may be able to steer to a quick return.”
The keys to that return will be limiting the damage as much as possible and taking next steps as soon as safety measures permit activity to be resumed. To that end, James daSilva of SmartBrief offers the following no-nonsense advice for supply chain organizations adapting to an upside-down world, those facing near-term revenue reduction, and even those “barely hanging on”:
- Spend time and money on talent and training. And do not lose great people, he warns.
- How you market and sell needs to change. Now is the time to be visible. Check in with your partners and other stakeholders, and think about how you can help them, rather than sell to them.
- If you need to make cuts, try reduced hours, furloughs and pay reductions first. This keeps people from fleeing and ensures you have the organizational and structural capacity for recovery.
- Values and behavior still matter. “A values-based culture modeled by leaders remains a strength, especially during a time when your employees will be distracted and disrupted,” daSilva explains.
- Be clear, show a path forward, and don’t pretend everything’s great. Clarity and specificity will help you create an effective plan for mitigating and overcoming the crisis.
“There isn’t much we can do to prevent recessions; they are a normal part of a functioning economy,” writes Holly Poulos in the brand new issue of SCM Now magazine. “How we prepare for that eventuality, however, is within our control.”
Learning from the experience of others is one solid strategy to keep moving forward. Poulos’s feature article, “Prepare Your Supply Chain for the Inevitable,” details stories of resilient companies from the automotive, food and beverage, and retail sectors that survived and thrived during the Great Recession and other crises. SCM Now also includes articles that explore how digital tools can help your organization compete under challenging circumstances and techniques to alleviate pressure during stressful times.
Our world is, indeed, upside down. But with the right strategies and mindset, we can achieve an equilibrium again. Start by reading the award-winning SCM Now magazine.