COVID-19 is all over the world. More than 180 geographies have reported a confirmed case of coronavirus and almost everyone on this planet is adversely affected by its impact, directly or indirectly. Needless to say, an event of this scale would bring along many catastrophic consequences- social and economic. Many pundits have declared COVID-19 as the “Black Swan” of 2020 with global economies staring at one of their worst recessions ever.
Let us understand the term ‘Black Swan’ to delve more into this. A ‘Black Swan’ is an unpredictable event that is beyond what is normally expected of a situation.
The underlining takeaways from this term are –
First- These events are extremely rare, cannot be predicted beforehand and come with severe consequences.
Second- Since they cannot be predicted, the only way to escape or reduce damage is to have robust systems in place.
Third- Once the event occurs, people tend to rationalize the event as having been predictable.
Black Swan is a graceful reminder to move from any position where you feel powerless and at the mercy of external forces; it is time to reclaim your personal power.
VDMA India organized a webinar on Tuesday, 28th April 2020 on the topic “2nd CEO Panel Discussions on Predictability in Unpredictable Times” with an aim to provide some insights into how to prepare for the present challenge and future requirement.
The discussion was moderated by Mr. Rajesh Nath, Managing Director, VDMA India. We were privileged to have the following VDMA members as our esteemed panelists:
Mr. Ajay Bhargava, Managing Director, RITTAL India Pvt Ltd.
Mr. PankajVyas, Chief Executive Officer, SIEMENS Technology & Services Pvt Ltd.
Mr. HarshaKadam, Managing Director and CEO, Schaeffler India Ltd.
Mr. Yatindra R Sharma, Managing Director, KHS Machinery Pvt Ltd.
Dr. LovneeshChanana, Vice President, SAP India Pvt. Ltd.
The negative effect of the COVID-19 pandemic on business globally and in India is clearly visible as industrial activities have come to a complete standstill. Keeping in mind that we are hopefully inching towards a possible opening of the lockdown, irrespective of whether partial or full, the panelists were asked regarding the business strategy they would adopt post lockdown. So the panelists talked about their strategies broadly divided into 3 heads – Inventory Management, Overhead Costs, Vendor Development/Vendor Contracts.
COVID-19 is forcing Inc to reassess its workplace. Companies will begin to invest in Software and automation. The discussion went deeper to have an understanding of how large enterprises like Siemens Technology, Schaefflerand SAP been able to adopt Work from Home and how do they see the development post Lockdown. Here SAP mentioned that employee's health and wellness have been of their main concern as they work from home. So they have come out with an app to track the health of their employees.
When the panelists were asked to share their thoughts on how to handle challenges of People’s cost and Overhead costs optimization, Rittal mentioned that as the travel cost is already reduced owing to the circumstances, they further reduced their training cost by turning to e-learning platforms, their marketing cost by going digital. The panelist mentioned that they have been keeping in line with the government guidelines and have been paying the wages and salaries to their employees. However, since it is perceived that liquidity is going to be a challenge in the time to come, some panelists mentioned that they may ask their workers to work overtime or on Saturdays or apply for earned leaves.
When asked to speak on the creation of Demand, Siemens mentioned that pushing fiscal stimulus is a way, however rather than handing freebies in the hands of the people, pushing stimulus for creating jobs will lead to creating demand through creation in technology and innovation. In addition to which SAP mentioned that we have already seen repurposing of the factories because of the creation of demand in alternative sectors like the automotive companies changing the production line for producing the masks etc.
When asked about challenges due to Supply Chain disruptions, KHS mentioned that some of their consignments are already stuck at the ports due to the lockdown and quarantine guidelines. Moreover, the crisis has taught us the risk of dependence on other countries, and may thus give way to more localization.
There are two perspectives to consider – health and economy. These cannot be considered as mutually exclusive as one impacts the other and vice versa. In my view, the lockdown should have had a considerable impact on the Covid-19 “curve” and in, all likelihood, the curve should have flattened. This means that the chain of infections would have been broken and an increase in the number of new cases would stop following the exponential function. This would be a tremendous achievement – not only because India has a large population but the population density in some areas is so high that social distancing becomes an oxymoron.
A lot has been written already about the new normal – how consumer habits would change, how several industries would have to reinvent themselves, shift their paradigms, some businesses would flourish while some would flounder
Siemens mentioned that the new normal would be a shift towards more focus on logistics, communication, both internal and external with the customers, and productivity.
However, before we reach the stage where we start feeling the impact of these changes, there would be a big challenge of restarting the economic engine of India. This challenge would come in the form of liquidity crunch, logistics, and supply chain smoothening and labour availability. Jump starting the economy in terms of liquidity and ensuring quick and efficient ramp-up of logistics is in the realm of policy-making which we must trust our government to be competent to address. It is the labour situation that is going to require careful handling as this one deals with people and dealing with people is always complicated.
If we look 6 months down the line, when the panelists were asked their opinion which industries would grow and which are expected to see a dip, Schaeffler mentioned that automotive sector was facing a crisis even before the Coronacrisis, moreover the change in emission regulation standards was also said to bring a dip in the industry. The industries which will see a growth in automation as productivity and safety demands will increase and digital infrastructure as more people will tend to turn digital after the crisis.
Before concluding, VDMA India also conducted 2 polls with the attendees. One of which was to understand the topmost challenge they are facing, to which 66% of the attendees responded that demand has been most adversely affected by the pandemic, and 57% said that challenges in receipt of the customer payments are another big difficulty. The important question in the mind of most of the attendees is Business Survival Strategies for the next 6 to 9 months. Panelists were asked to share their Mantra of survival through a short statement. Almost unanimously the panelists mentioned that cash management, vendor optimization, and supply chain stabilization are a few of the important strategies for them.
The 2nd poll was conducted amongst the audience to assess their feeling on time to attain normalcy, to which the majority of the audience said it likely to be by the end of September 2020.
Finally, Mr. Nath concluded the discussion saying that a rebound is possible. Decisions taken now will determine the future shape of the recovery. We need to lay the foundations for a strong, sustained, and socially inclusive recovery.
Each one of us now knows that we are facing an insidious adversary who is invisible and potentially deadly. So was the Spanish flu. So was SARS. So was Ebola and Zika. We, as a human race, defeated all – in some cases more causalities than the others, in some cases it took more time than with the others – but, in the end, we prevailed. We must ignite the fire of belief in us and face this adversary firmly armed with weapons of better hygiene, social distancing, and survival strategy– knowing that some of us may fall in this battle but we have faith that we shall overcome. We must make the movement from fear to faith!
The webinar received an overwhelming response as the maximum registration limit of 100 participants from the industry and German engineering fraternity was attained within two minutes of starting the webinar.
