Which Solutions for Businesses in Crisis Time?

The crisis caused by the Covid-19 pandemic has greatly changed companies’ operations. Every business needs to have response plans, more or less, to cope with constant economic volatility.

Serious adversity

The Covid-19 pandemic showed each nation's dependence on the manufacturing of others. Every country must accelerate and respond to the fallout of this pandemic. More than ever, the health of the global economy depends on the creation of vaccines.

According to a recent study by CEL Consulting, a supply chain consulting and training firm, the Covid-19 pandemic has produced an impact on almost every economy or every type of business. The annualized growth rate is forecast to decline to 1.5%, down from 2.4% projected earlier by the Organization for Economic Cooperation and Development (OECD). From the policy perspective, response timing, approach to solutions and bailout money adopted by governments and the capacity of each country's health system will determine economic opening time.

Vietnam’s real estate, logistics, consumer goods, construction, industrial manufacturing and agriculture have been entailed to rolling impacts of the Covid-19 pandemic. The survey conducted in late March and the first two weeks of April by CEL shows that nearly 60% of businesses have serious supply and demand problems. The pandemic weakens the supply chain when inventories run out quickly while a drop in demand disrupts cash flows of businesses.

According to the Vietnam Logistics Business Association (VLA), since the epidemic outbreak, manufacturing activity in China has been stagnant, resulting in low export output. As a result, many international shipping lines had to cancel dockings at some of China's ports due to serious cargo shortages. Some Vietnamese products imported from China are affected by this, for example, fabric, fiber, yarn, iron and steel, which witnessed a sharp decline in value in the first two months of 2020. This meant that the performance of each link on the value chain could produce a strong impact on the rest.

However, according to CEL experts, epidemic evolution has also brought many opportunities to Vietnamese firms. Manufacturers of respirators, medical supplies and foods received orders from places struggling to cope with the epidemic, such as Europe and the United States. The contagion motivated future investors to join the wave of relocating production lines from China to Southeast Asian countries. In addition, the adoption of the EU - Vietnam Free Trade Agreement (EVFTA) has also added potential to Vietnam's economy compared to other countries in the region.

What solutions?

According to CEL experts, only companies that adapt well to flexible supply chains or spend much will survive. For example, Biti's has quickly changed its product portfolio to keep up with new market trends, launched new product lines with a message that echoed support for the fight against the pandemic where “no one was left behind.” Other businesses also shifted to online sales channels to serve the domestic economy as online demands arise, ranging from education, gaming and movies to remote healthcare applications and purchasing for others. In addition, the surging demand for home delivery at the time of social distancing entailed a certain growth of recruitment in last mile delivery.

In addition, the pandemic crisis has caused a serious decline in demand, followed by cash flow disruptions and high risk of bankruptcy. Therefore, ensuring liquidity should be a top priority and companies need to set up divisions to handle urgent matters to carry out financial solutions to resist the crisis.

To assess demand and plan supply sources, businesses need to take measures to minimize negative impacts on demand and supply. Market fluctuations need to be updated quickly and accurately for them to apply to operational strategies. Particularly, they necessarily base on updated disease information, actions of the government and economic actors and situations of customers and suppliers to work out countermeasures. They should also consider different scenarios to come up with appropriate counter plans for each scenario and act quickly. Working out many scenarios will help them take preventive measures and avoid being trapped in passive situations.

In addition to the above solutions, they need to take advantage of this time to promote outstanding or undelivered tasks such as designing websites, standardizing processes, researching new products and services, training and restructuring the workforce by streamlining and raising core values to stand ready for future uncertainties learned from the Covid-19 pandemic.

The crisis time requires simplification and concentration of resources to act quickly and properly for the most important values ​​in the business. Besides financial and technical solutions, it is very important to work together to share information and support each other to solve difficulties. Their resistance and prosperity, not only built from assets but also from prestige and good relationship with partners and reciprocal support with others, is key to defeating the epidemic and bringing useful benefits for businesses and society.

By Thu Ha, Vietnam Business Forum