Heat Map for a Response Framework - Part 2
As shown in the previous article, reassessment of financial standing is key to preserving the cash position in these tough times, when changes are simply occurring from one moment to another. Besides holding as much to your cash it is as important to understand the entire value chain and where the potential action areas are.
So, the “heat map” for the companies continues with some recommendation of action for short and medium term for supply chain, markets, products an employees.
2. Review of supply chain
Draw and understand the industry supply chain:
- understand who is upstream
- understand own company importance in the chain:
- % of revenue of the supplier generated by sales to your company
- can suppliers switch to other clients easily and replace you
- can you renegotiate contracts without fear of being cancelled
- can you secure your need of supply to avoid disruption
Understand who is upstream and dependencies of direct suppliers from other suppliers
- location of suppliers
- which are their dependencies, can they easily switch
- what are suppliers with potential delivery problems and what is the probability of that
- calculate potential impact of supply disruption
Understand alternative supply sources:
- actively seek for new suppliers, to mitigate disruption risk
- use your position as a new client to attempt to negotiate better terms or secure supply
3. Review of markets
Draw and understand the industry supply chain:
- understand who is downstream
- understand own company importance in the chain:
*degrees of concentration / % of sales to clients
*can your clients switch to other suppliers easily and replace you
*can you renegotiate contracts without fear of being cancelled
*can you secure your sales to avoid disruption
Understand alternative markets:
- where are your opportunities in terms of potential shortenings of supply chain - companies buying from longer distances, etc and whom can you replace
- actively seek for new markets, to mitigate disruption risk
Understand the need for physical presence for your sales:
- % of sales on and off line
- elaborate strategy to move online: start with simple deliveries and grow from there
4. Review of Products
Determine importance vs. degree of customer satisfaction:
- understand your product importance for your customers
- address the degree of satisfaction, try to improve it, not to push for features that have no customer value
Understand customer value:
- what is the solution you are trying to solve
- what are features that are used and what is not used by the customer that much
- decommission products / features that prove are not important and focus your resources on what could make a difference for your business
What are alternative products:
- how easily your products can be replaced
- what is your unique value proposition
- how can you change and adapt your products to be better suited for online
5. Employees
Protect your employees:
- increase % of work from home
- where work from home is not possible, minimize de impact of public transportation
- organize in shifts, to avoid too much contact
- provide for simple health check-ups at work
- provide for sanitary environment
Communication:
- set up regular calls to keep the flow inside and between teams
- communicate constantly on the strategy the company is taking to minimise disruption
- communicate on the impact on their activities and themselves as persons
- be transparent with the challenges you face and engage your employees to find together alternatives to overcome the tough times
Empathize:
- understand that the new way of working is hard for everyone to adjust, some are more at ease with technology, some are lagging behind
- together with your IT department, assist employees for a smooth implementation of home office
- respect working hours - it is easy to send lots of information and be online with meetings all the time, but allowing for some breathing time is important