Are Indian companies ready to navigate through the COVID times?

KPMG in India has revealed the best practices adopted by consumer companies operating in India while dealing with the global COVID-19 pandemic. The report, titled ‘Navigating through COVID-19; Re-imagine, re-invent, reach out’, is a repository aimed at aiding consumer companies and retailers across India to comprehend how innovative strategies along with implementation of best practices can lead to a positive change over the long run.

COVID-19 had a significant impact on consumer companies across their value chain. Customer sentiments have changed significantly with emphasis on safety and hygiene, increased focus on essential items, alternate avenues for purchase and reduction in discretionary spending. Logistics and distribution operations have seen disruptions and uncertainty over availability, evolving government policies and changing customer preferences. Managing undisrupted production has been challenging, considering continuous supply of key raw materials, availability of essential manpower resources, complying with policies and managing changing demands.

New operating model of working from home has forced companies to create distributed secure infrastructure and at the same time safeguard the well-being of employees. Companies have experienced sudden changes in cash flow and have had to manage high fixed costs thereby creating new challenges in managing working capital.

Speaking on the report, Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG In India, said, “‘Navigating through COVID-19’ is a unique report that has been put together after interviewing 142 CXOs from almost 150 consumer companies. The report aims to highlight innovative practices and transformation themes which companies have implemented to adapt and drive business during COVID-19. Our survey highlights over 550 practices implemented across the value chain to combat disruptions caused by COVID-19. Of these, 189 practices (34 per cent) are in the front office, 157 practices (29 per cent) in the middle office and 207 practices (37 per cent) in the back office.

“Further, our survey also supports us to construe that consumer companies that are most likely to prosper over the long-term are those who are re-inventing business models to achieve operational excellence, are able to understand what their customer wants and are able to enhance employee productivity whilst prioritising safety for their employees and customers. With the new digital/ virtual channels being a key way to meet customers, direct to consumer/ direct to home is a channel adopted by most companies. However, it is important for companies to ensure that online channels are able to integrate seamlessly with the overall omni-channel experience. Going forward, it will be important to continuously  evaluate profitability across channels and analyse shifting consumer preferences. Lastly, it is important for brands & retailers to rethink the cost of doing business across multiple channels and also drive cost improvement/ rationalisation opportunities across the value chain. Overall, the combination of having positive-thinking consumers, productive employees and pro-active businesses could indicate the road ahead for the economic fortunes of consumer companies,” Razdan added.

Each of the CXOs was interviewed digitally on best practices used to innovate and adapt to changing market and operation dynamics. Survey questions were structured across value chain to include front office, middle office and back office.

Key highlights of the survey:

Consumer companies surveyed have invested efforts around operations, customer centricity and employee welfare.

Front Office: The primary focus has been for change of practices in sales and channels (62 per cent) followed by marketing and communications (23 per cent) and customer initiatives (15 per cent).

• Across sales and channels focus has been on reaching customers with the right value proposition
• Huge impetus given to customer engagement for driving marketing and communications
• With hygienic buying gaining impetus, safety is the premise for customer services offered

Middle Office: Most of the middle office practices have been in the area of supply chain management (37 per cent) and production operations (29 per cent).

• Order fulfillment and S&OP have gained traction in the new supply chain norms
• Flexi-production operations along with safety and hygiene have been core for companies
• Alternate sourcing, payment cycles to vendors and cost focused procurement has gained traction
• R&D and new product development initiatives on the rise

Back Office: Over 50 per cent of the back office practices were driven by HR functions and 31 per cent by Finance functions.

• HR functions have largely focused on staff welfare, L&D and employee morale
• Finance functions are focused on working capital optimisation and cost reduction practices
• Increased efforts on building a robust IT infrastructure and leveraging digital tool and technologies

The report further states that going forward, consumer companies need to focus on the 3P’s:

Positive Consumers

Buying preferences of consumers are rapidly changing and companies need to find innovative ways to engage with consumers for understanding and building relevant value propositions around these evolving changes.

Safety and hygiene is becoming a top priority for consumers and companies need to not only include these factors across its operation, but also effectively communicate the same with consumers to build necessary confidence and trust.

Consumers have opened up for new channels of trade (e-commerce, digital partners, etc.) and companies need to build necessary agility in its operations to complement traditional channels with such evolving avenues to reach consumer.

Productive employees

Changing market dynamics will require companies to invest in upskilling its employees to evolving skillsets (digital, analytics, etc.) and also take a holistic view on skillsets to include softer aspects such as communication, sustainability, leadership, etc.

With lesser opportunities for social interactions companies need to devise innovative measures to ensure similar level of employee engagement and keep team spirit high.

Digital platforms are increasingly being used to enhance productivity and support remote working environment; companies need to design its own digital strategy and invest in building right-fit digital platforms across operations.

Proactive Businesses

With changing shopping preferences of consumers and higher service level expectations, companies need to build agility in its inventory planning and logistics operations to complement its traditional distribution network with evolving distribution channels.

Strategic cost reduction initiatives are becoming imperative as higher operating margins can offer companies a significant competitive advantage in current environment.

As companies are recrafting its long-term and business continuity strategies, to stay ahead of market requirements companies need to also expedite its operational planning and decision making processes by deploying analytics and necessary technology platforms.