Over a year after the pandemic, nearly every business on the planet has felt the effects of COVID-19, but the extent varies widely, both within and beyond national and industry boundaries. We can gain some insight into the reasons behind this and the policy ramifications from a World Bank study of firms.
One in four businesses witnessed a 50% drop in revenue. On the other hand, 65% of employers had to reduce payroll in some way, whether by cutting hours, compensation, or providing leave. Despite these changes, just 11% of businesses were forced to lay off employees.
In order to overcome the challenges, a lot of companies are now adopting digital solutions with 34% of firms increasing their use of the internet, social media, and digital platforms.
According to a recent survey, businesses in the US are planning to rethink their supply chain strategies in the wake of the severe disruption caused by the COVID-19 pandemic in order to become more resilient, collective, and networked with customers, suppliers, or other stakeholders. Let’s take a look at the detrimental effects of the pandemic on the global industry.
The Adverse Effects of the Pandemic on Businesses
Economic Slowdown of the Global Manufacturing Hub
Where strict regulatory responses were required, businesses surely felt the repercussions, both immediately and in less obvious ways down the road.
Manufacturers in the technology, automotive, consumer goods, pharmaceutical, and other sectors all issued sales warnings in response to the shortage of labor and components caused by travel restrictions and quarantines that affected hundreds of millions of people in China.
Prices for commodities dropped due to slower growth in China’s demand for raw resources, prompting some manufacturers to contemplate reducing production.
As a result of these mobility and work disruptions, Chinese consumer spending dropped significantly, putting pressure on many different types of multinational corporations, including those involved in aviation, overseas education, infrastructure, travel, entertainment, neighborliness, electronics, consumer goods, and luxurious goods.
At least 0.1% of global GDP growth might be lost this year due to a possible 0.5% slowdown in China’s GDP growth. There will be repercussions in both established and developing nations that rely heavily on China for commerce, tourism, and investment. Pandemic resistance is poorer in some of these nations due to preexisting economic fragilities and inadequate health systems, despite some overlap.
In the face of the pandemic, many nations in Asia and Africa lacked the necessary infrastructure to detect, diagnose, and treat people. Weak systems increase the likelihood of infection and its subsequent social and economic implications, jeopardizing health security everywhere.
Increased Cost of Commercial Logistics
The unexpected change in shipping rates will impact supply chains since shipping freight accounts for the transportation of at least 90% of commodities across the globe. The average cost of shipping a container across the world increased from $1,362 in November 2019 to $9,628 in February 2022, as measured by the Global Container Freight Index. This Index shows that the most costly flights are departing from China/East Asia and heading to the East Coast of the US ($16,893) or the West Coast of the United States ($15,218.00).
Producers and consumers in the US, Canada, and Mexico who rely heavily on China are therefore feeling the most financial stress. When transportation prices rise, it becomes more difficult for small companies and farmers to compete. Because of this, major merchants like Walmart, Amazon, Kroger, and Home Depot have acquired a disproportionate share of the shipping transportation market.
The transnational entities that dominate the market have reaped enormous profits as a direct consequence of the significant rise in transportation costs. For example, Maersk had its greatest quarter ever in Q3 2021, with gross profits of USD $5.9 billion on sales of USD $16.6 billion, due in large part to the rising cost of shipping, which had been its mainstay since the company’s establishment in 1904.
New Consumption Habits & Patterns
Altering consumer habits is also disrupting production processes. Some segments of the population have amassed wealth as a result of the disruption of their spending patterns brought on by the rise in consumer demand caused by higher fiscal stimulus and tax refunds, especially in industrialized nations.
Due to customers’ increased discretionary income as a result of cutting down on routine costs and their desire to avoid contracting COVID-19, the popularity of online shopping has increased. A surge in home deliveries as a result of the pandemic has pushed worldwide eCommerce to USD $26.7 trillion, as reported by the United Nations Conference on Trade and Development (UNCTAD). According to the available statistics, internet sales in the United States reached a record-breaking $791.70 billion in 2020, up $105 billion from the previous year.
Semiconductor and Microchip Shortages
State reactions to supply chain disruptions may be seen in the semiconductor and microchip industries. These parts play an essential role in the automotive sector, therefore the scarcity has had serious consequences.
Both South Korea and Taiwan are major players in the global semiconductor industry, with Taiwan alone accounting for 20% of global production. Both nations have had difficulty coping with COVID-19, and Taiwan has had to contend with droughts that have strained its energy infrastructure even more. As a result, the United States and the European Union are attempting to react by revising both domestic and foreign policies related to supply chain governance and operation.
The research, titled “Building Robust Supply Chains, Revitalizing American Manufacturing, and Nurturing Broad-Based Growth,” recommends safeguards for “important minerals and chemicals,” “large-capacity batteries of the kind used in electric cars,” and “pharmaceuticals and sophisticated components” to assess supply chain vulnerabilities in the US.
A part of the EU’s $884 billion has also been set aside to expand Europe’s semiconductor design and production capabilities. Similar initiatives might be adopted by other nations to ensure the fundamental requirements of their citizens are met and to help industries recover from the disruptions in supply chains that are now impacting them.
Key Components of Post-Pandemic Recovery
Pandemic Resilience Should be a Priority for Your Business
Pandemics represent not just an independent danger to companies but also a multiplier of other threats. Long-term, COVID-19 may provide an additional incentive for companies to reevaluate their supply chain exposure to outbreak-prone areas and reorganize regionally, in addition to deploying protectionist policies and energy efficiency demands.
Businesses and governments should reevaluate their exposure to the complex and ever-changing interdependencies that might amplify the consequences of pandemics and other crises, above and beyond the usual concerns of operational continuity, employee safety, and market preservation.
Since the globe tends to go through cycles of fear and negligence concerning pandemic preparation, many people will likely get complacent after COVID-19 has been controlled. Companies that fortify their ability to react and recover from new global threats by strengthening their strategic, operational, and financial defenses will be in the best position to succeed.
The post-COVID strategy needs to be rethought because everything has changed. The current business model makes it impossible to achieve growth.
Rethinking the Nature of Work
Deloitte found that 48% of respondents stated their company was “seriously engaged in automation initiatives,” with 24% saying they use AI and robots to handle mundane chores.
The effects of automation on labor output are becoming apparent right now. Companies are employing Service Delivery Automation (SDA) to monitor a network of intelligent devices and transform thousands of data points into hyper-personalized marketing campaigns so they can grow more quickly and efficiently. A human writer may still produce the ideal tagline, but a computer will choose where, when, and how you see it.
Increasing Productivity with Better Work Methods
Many companies can benefit from increasing their use of automation, but those in the field service industry are putting a premium on artificial intelligence (AI) to boost productivity and customer satisfaction.
For the most part, the companies are operating with one office coordinator for every four field techs. These coordinators are responsible for a wide variety of duties, including but not limited to issuing work orders, locating needed supplies, and providing on-site emergency assistance. It’s a time-consuming procedure that needs improvement because of how slowly it moves. A little amount of automation might allow ten office coordinators to manage the work of twenty field workers.
Pursuing Operational Efficiency & Growth with Robotics
As a key performance indicator, availability is at the forefront of field service managers’ minds. Even a slight improvement in asset uptime is crucial in an industry where every minute of downtime is money left on the table.
Predictive upkeep is the solution for many businesses. Artificial intelligence can potentially prevent the need for the conventional break-fix paradigm, in which a professional isn’t sent out until something breaks.
Take two similar skyscrapers, one in snowy Chicago and the other in balmy Los Angeles. Both towers are identical in design, yet they experience distinct forms of wear and strain.
Predictive maintenance uses artificial intelligence (AI) and sensor-equipped equipment to analyze real-time device monitoring and historical data from comparable locations to devise an optimal maintenance plan for each tower. Technicians are called in to fix broken components or determine the source of a problem only as a last option.
Annual spending on intelligent service delivery automation is growing as businesses depend on AI to achieve operational efficiency. Whether it’s about analyzing past data to foresee problems or building chatbots that can have genuine conversations, enterprises are utilizing intelligent automation to boost productivity and creativity.
Take stock of your present business processes and data collection capabilities before deciding when, where, and how to adopt AI inside your firm. To reap the full benefits of intelligent automation, you need to undergo a complete transformation, but this might be hampered by the presence of legacy software and outmoded processes.
Finding the Right Blend for Your Business
Organizations will have to shift their attention from human ways of producing, allocating, and executing work to automation as customers’ demands for speed and quality of service increase.
A recent analysis by McKinsey found that in six out of ten occupations in the United States, at least 30% of the work could be automated. Speaking with clients has led me to feel that it needs to be closer to 70%. If given enough data and the correct methods, almost every task can be taught to a computer.
Of course, automating everything will take time. Keep the following in mind as you search for methods to increase the level of automation inside your company.
- Define Roles and Priorities: The necessity for human labor will persist despite the proliferation of automation; thus, it is vital to establish clear responsibilities and goals. Give them the freedom to concentrate on the more nuanced tasks, like responding to unusual escalations or putting a smile on the faces of those they contact.
- Iterate, Iterate, Iterate: Do not automate ineffective procedures without ensuring that they are iterable. You should use continuous monitoring and analysis to guide your automated processes. The human element should not be overlooked; for example, if a back-office coordinator is constantly overturning an AI advice, the system should attempt to learn why this is the case and modify it appropriately.
- Find Balance Between Human & AI: Artificial intelligence is improving in mimicking human performance, but it is still not ready to function independently. Feedback on automated procedures and resolution of escalations still need human involvement. The most successful companies will strike an optimal balance between human effort and automation powered by AI.
Final Word
Recent years have brought unprecedented possibilities and threats due to the rapid pace of digitalization and disruption. Although the future normal will be drastically different, enterprises must maintain their commitment to transformation. Cooperative Computing service delivery solution aims to maximize value and find solutions that meet your objectives and demands through a risk-averse approach combined with cutting-edge technology.
