One of the first noticeable effects on international business was the interruption of supply chains caused by bottlenecks in logistics. But supply chain bottlenecks are only part of the problem: suppliers in affected countries may have to cut back production due to outages, which could lead to additional supply bottlenecks for raw materials and semi-finished products. This, in turn, presents recipients with acute problems, as inventories are often kept low due to the just-in-time philosophy. The other major problem concerns companies whose goods were about to be delivered, for example to China, and cannot be delivered due to limited freight capacities and closed ports.
As air freight prices have increased tenfold and delivery often triggers further payment tranches, some companies have been confronted with liquidity shortages. In addition, there have of course been numerous cancellations of trade fairs and events, whose costs are not always refundable.
What should internationally active SMEs do in response?
In this situation, the safety of your own employees worldwide has top priority. You should also immediately prepare for an escalation, for which a pandemic plan is needed. It is also extremely important to define key processes and people to ensure business continuity and ensure that measures can be implemented. Who needs to be physically present and who can work from home? Can payments be effected? Are wage payments guaranteed? Take the time to carefully research such cases.
Inform yourself, create trust, strengthen your position
Of course it is also necessary to limit damage as much as possible. If a supplier stops producing, for example, it would make sense to look for alternative sources of supply, including in other markets. In difficult times, a carefully maintained network is highly valuable. Help out within your industry, activate your contacts, talk about your problems. We find solutions faster when we work together. Also make sure to inform your customers and suppliers promptly and regularly. Communicating in a timely manner will create trust and strengthen your position.
- Form a task force that meets regularly and at shorter intervals depending on the situation.
- Make home office working possible for your employees: check with your IT department whether, for example, enough licenses are available and all employees have access to the relevant documents.
- Review alternatives for canceled events and meetings such as webinars or video conferences.
- When meetings and events are canceled, resources are freed up. Gain an overview so that these resources can be used for other activities such as early project planning, internal projects or preparations for the period following the crisis.
- Visits from customers and partners, acquisitions and networking opportunities are no longer necessary. But this means investing even more energy in maintaining contacts, by telephone or video if necessary.
Lessons and opportunities for the future
The coronavirus is here and it is necessary to be well prepared. Companies that come up with different scenarios, play through them consistently and develop a plan B will do well, whether it's in response to cyber attacks, blackouts or even pandemics. In addition, and as a general rule of thumb, it makes sense to look ahead strategically, to diversify risks early on and to constantly question your business model.
Being prepared for the time after the crisis
It is also important to prepare for the time after the crisis. Will there be a surge of demand in certain countries or will certain industries fall into recession? Think carefully about how you are positioned for a best-case or worst-case scenario. The better you prepare for possible scenarios, the more you can benefit as a company, secure market shares and come out of the crisis stronger.