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How the World’s Supply Chains Can Come Back Stronger than Ever

Sept. 30, 2020
A new report from McKinsey outlines 10 steps that companies should be taking now to get their post-COVID supply chains ready to tackle the next challenge that will be put in front of them.

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Since March, companies have been scrambling to reorganize their supply chains, establish remote operations and make some pretty tough financial decisions. Now, the focus is being turned to reenergizing organizations and “acting” versus “reacting.”

“Even as the COVID-19 crisis continues to create a world of uncertainty, the goal must be to rebuild for the longer term,” McKinsey states in a new report. “Companies that are strong and resilient will be better placed to survive and prosper. Those are qualities that can’t be taken for granted; they need to be cultivated.”

To help stoke some productive conversations and get companies thinking about how to approach the post-COVID recovery period (and beyond), the global consultancy suggests these 10 strategies: 

  1. Think of the return as a “muscle.” As the COVID crisis begins to wane, companies need to exercise certain capabilities, including the willingness to change future plans and manage structural shifts. “Handling the crisis is a marathon,” McKinsey points out, “so the emphasis should be on reinventing business models for 2021 and beyond, and not so much on protecting 2020.”
  2. Focus on high-impact actions. Which actions are best for the business? The answers to this question differ by company, it says, but may include technology-enabled next-generation operations, analytics-enabled engineering productivity and automation of service-related processes.
  3. Rebuild for speed. “What used to take a week now must happen in a day,” McKinsey says. That means speeding up decision-making, deploying nimble teams, redeploying talent and empowering tomorrow’s leaders to take responsibility today. “Cut nonpriority initiatives to free up leadership time.”
  4. Reimagine the workforce from the top down. Determine which employee segments are under new forms of stress and pressure (i.e., parents of small children, isolated single people and caretakers). “Consider changing how work gets done, whether that’s through job sharing, flex teams, or hot-seat changeovers,” McKinsey advises, “and continue to invest in learning.”
  5. Make bold portfolio moves. “Companies that make smart portfolio moves now will benefit disproportionately after crisis recovery,” it says. “To get positioned for strong growth in 2021, shed business units that aren’t part of the future growth equation and move quickly to fund new, transformational growth areas.”
  6. Reset technology plans. Assess technology investments and reset them for value and speed. “Clean-sheet your tech budget for 2021 rather than working off the backlog,” McKinsey says. “Ensure that tech capabilities are mapped to sources of customer value.”
  7. Rethink your company’s global footprint.Given the vulnerability of just-in-time supply chains that the COVID-19 crisis revealed and the diminished labor-cost advantage of offshoring, companies need to take a hard look at how and where they operate,” says McKinsey, which points to reshoring or multi-shoring operations and developing regional—rather than global—strategies, as viable options.
  8. Take the lead on climate and sustainability. Some pandemic-related economic-stimulus measures (i.e., the European Green Deal—a plan to boost the efficient use of resources, restore biodiversity and cut pollution) have been linked to sustainability-related goals. “Explore industry consortiums for setting new standards,” McKinsey suggests, “and creating large-scale impact and to embed sustainability into business by design rather than as an add-on.”
  9. Consider the role of regulation and government. As governments continue to act as payers, lenders and insurers of last resort, their reach has extended into all aspects of business. “Work with them on top priorities, such as reskilling and building digital infrastructure,” it says. “Develop insights on social shifts that could inform legislation and regulation.”
  10. Think beyond the bottom line. Having a strong sense of purpose helps companies navigate uncertainty; it also helps people stay engaged and productive. “Now more than ever, companies must match their actions to their words,” McKinsey recommends. “Embrace stakeholder capitalism—the idea that successful companies serve more than just the bottom line.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.