Coronavirus: Five strategies for industrial and automotive companies
To rebound from the coronavirus pandemic, industrials must undertake a journey that begins with resolve and ends with fundamental reform.
By Joe Dertouzos, Heike Freund, Michael Mischkot, Asutosh Padhi, and Andreas Tschiesner – We are still in the early stages of a global health crisis resulting from the coronavirus pandemic. Protecting lives is the first priority, but we must also protect our livelihoods. For automotive and industrial companies, surviving and emerging stronger at the far end of this crisis will require thinking beyond the next fiscal quarter. Success in the long run will require a journey across five stages: Resolve, Resilience, Return, Reimagination, and Reform.
The first stage, Resolve, involves determining the scale, pace, and depth of action required. To do so, companies in advanced industries must take the following steps:
- establishing a nerve center to steer the organization, serve as the information hub, manage risk and responses, and align all stakeholders
- protecting employees by making their health the paramount concern and adjusting production as needed
- screening and safeguarding the supply chain by understanding risks and taking action to address disruption
- adapting marketing and sales by identifying and mitigating the risks of declining sales while meeting critical customer needs
- maintaining financial health by improving liquidity, reducing costs, and establishing a spend control tower
During the Resolve phase, companies must also make difficult choices, such as suspending production facilities, suspending discretionary spending, and furloughing workers. These decisions will require a comprehensive understanding of the situation, including data-driven scenarios for market evolution.
Consider the automotive industry. It is difficult to predict how the pandemic will affect sales in the European Union and the United States, two regions where coronavirus penetration is still emerging. We draw insights about potential developments by looking at the evolution of auto sales in China over the first quarter, since this country has already “bent the curve” and begun to recover from the coronavirus.
As industrials experience virus-related shutdowns and economic pressures, they should move quickly to address near-term cash management challenges and broader resiliency issues. more>
- Coronavirus: A response framework for advanced industries companies, Thomas Baumgartner, Bernd Heid, Jakob Fleischmann, Heike Freund, and Dominik Luczak
- Coronavirus: Leading through the crisis