Recovery Plans Re-Evaluated as Demand Shifts
May 11, 2020

We salute the chemical industry for standing up to the pandemic with an immediate and overwhelming response to meet the dynamic shift in markets. Chaos and confusion were quickly turned to organized and directed actions to ensure continuing operations as front line combatants in a global war against the invisible enemy.

America’s chemical industry was the linchpin to ensuring the safety and protection for frontline health workers and first responders with highly specialized cleaners and sanitizers for use on the person and physical spaces. General-purpose soaps, cleaners, disinfectants, and sanitizers were provided for the rest of the world to use as key weapons of war when combined with enhanced awareness of best personal practices for handwashing, social distancing, and quarantine to reduce infection and contamination rates.

But this disruption didn’t only affect the obvious products; it went deeper into the materials that make other materials used in this battle.  Plastics [and other materials] were used in the production of containers and packaging for the mentioned products, PPE for health workers and responders, as well as parts and components for medical equipment (inhalators, testing instrumentation, etc.) Other specialty chemicals were used by pharma, diagnostic, and healthcare maintenance operations.

The pandemic exposed how ubiquitous the chemical industry is when considering our needs and facing urgent survival situations. Credit should go to the operational, management, and leadership teams for their outstanding performance at this time.

RECOVERY CHALLENGES

Operationally, this unprecedented shift in need caused an immediate shift in forecast demand along with challenges of realigning the supply chain through rapid product rationalization (demand to zero on some products versus infinite demand for others) and resulting sales control.  

For many companies, it also exposed vulnerabilities of material supply chains by relying on a single source, or major portions of material and ingredients from global locations suddenly made inaccessible with government actions to close borders as citizen safety protection protocols.

As we look out towards recovery, questions flood in: 

When will the recovery happen?
What will the recovery look like?
Which of my products will survive, and what will demand look like for those survivors?
How can we mitigate and/or balance out these supply chain issues?
Are we organized and have the right team to meet these new challenges?

The IMF is predicting that Advanced Economies will experience significantly greater impacts from this pandemic (see graph below), so certainly each of the concerns above, along with many others, are valid C-suite and boardroom concerns.  

Essentially, everyone is impacted to the same degree; however, it is our immediate actions that will determine the long-term impact. As the economy took an immediate dive across all sectors, it resulted in a precipitous drop of GDP associated with an immediate spike of unemployment numbers.

The implications meant the bottom has dropped out of business income along with personal and disposable income. However, there is light at the end of the tunnel; governments and businesses are working to reopen the world for business, helping people get back to work. The key to the plan is safety, with the chemical industry being an enabler to make it happen.

RECOVERY PLAN

Despite companies still wrestling with the impact, robust recovery plans and paths need to be developed and implemented rapidly: focused on the immediate needs of forecasting, supply, operations, and logistics. 

The demand shift needs to be understood and restated to ensure a more accurate picture of the market is in place for supply planning. Through tweaking, the first two blocks of S&OP (Demand Planning and Supply Planning) forecasts are revisited and strengthened with customer communications and market reaction projections.

With today’s AI/IoT enabled supply chain, an immediate feed is available from customers and suppliers on changes in their forecast shifts for products and materials.  Balancing these demand shifts needs the agility of potentially changing production areas and product mix to support higher demand products and possibly develop a product allocation process across the customer base.

Material and logistics suppliers are necessary to support this new mix of product, production location, and volume.  As mentioned early, some supply chains have been severely disrupted by limited offshore availability, so finding alternatives is critical.  Implementing higher traffic on existing lanes and/or implementing new lanes creates a new landscape to working with logistics providers.

The key to remember is that your plan will be unique to your company and situation. As you develop the path to reopen, refer to our “Recovery RSVP” model below.

Recovery Plan RSVP

As you develop the path to reopen here are some thoughts to consider.
Do the right things right……right now!

RESPECT

As you develop the path forward, recognize that it is no longer business as usual, the way it was before.  The fact that you, your customers/clients, and suppliers may have lost team members during the pandemic, possibly key members of leadership.  For you to be successful at moving forward, you will need all parties to work together.

SAFETY

Is above all else.  Your people may have been furloughed during this time and may have lost touch with the workplace rhythm and practices.  Safety retraining and orientation are both critical and a MUST.  The assets may have been idled and need to be fully evaluated to develop a safe restart plan.  Maintenance, repair, and overall cleaning and disinfecting may be needed.  And, as workers return, or continue working in case the business did not go idle, you will need to consider the ongoing care and monitoring of workforce safety. 

  • Temperature Checks
  • Infection Testing
  • Supply of Handwash & Sanitizer
  • Handwash Stations
  • Masks
  • Social Distancing Rules
  • Travel Rules
  • Visitor Rules

VALUES

Adherence to your company’s values will determine the state of the organization post-pandemic.  There is a strong correlation between a company’s value system [and practices] and compliance with those values and survival in a severe disruption/recession/downturn.  Revisit your values and communicate with the workforce to reinforce the embodiment of the values in all practices and actions. Read our recent article on values. 

PLANNING

There is no substitute for a well-designed plan.  Go back to basics with Plan, Do, Check, Act, where planning is 60% to 80% of your effort and actions to move forward.  Consider that neither the markets, nor the workplace, will be the same.  What are the new rules?  Which products will fit in the new order?  Is my organization structured to meet new conditions, and do I have the right team members in the right roles?  There are simply way too many to list.  The point here is to never underestimate the value of a plan and ensure you invest time in developing the best plan while keeping the ability to stay agile and react to the disruptions we know are yet to come.