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Directors should plan for innovative UK manufacturing to revive their businesses post-Coronavirus

UK manufacturing innovation UK manufacturing was in dire straits even at the onset of the Coronavirus lockdown, with the CBI (Confederation of British Industry) reporting output dropping at its fastest pace since 1975 in the first quarter of 2020.
As it progressed the pandemic and lockdown revealed many weaknesses in the global supply chain, most notably in the availability of PPE (Personal Protective Equipment) for frontline health and care workers.
However, it is often said that in disaster there are also opportunities and many businesses demonstrated their agility in switching their usual production to manufacturing both PPE and sanitising equipment, for example.
But, as attitudes change, so the opportunities for innovation increase and it is a good time for directors to start planning strategies for not only producing essential supply chain elements within the UK but also for devising new products to fit the new agendas.
The UK Government has announced two initiatives aimed to protect UK business and promote innovation, Project Defend and Project Birch.
Project Defend aims to identify and protect vulnerabilities in business supply chains, with project leader Liz Truss recently describing three aims: reducing the use of suppliers from countries seen as “unreliable partners”; encouraging UK manufacturing; and, stockpiling key items such as medicines and components.
Project Birch is a short term initiative whereby the Government will “temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market” potentially until the end of the year.
Meanwhile support for a recovery plan with projects that support the environment has been given added impetus with a letter to the Government from 200 businesses urging it, among other things, to drive investment in low carbon innovation, infrastructure and those industries that support sectors covering the environment, increase job creation and recovery.
All this should encourage UK manufacturers to think in terms of innovation rather than striving to recover their existing operations.
A report by McKinsey in 2019 in the context of post-Brexit UK business and supply chains identifies several key issues directors should consider when planning their strategy for the future. Their findings are relevant in the current post-Coronavirus recovery context.
The key issues for directors, it says, will be to: redefine their sourcing strategy; revisit their footprint; review inventory build-up; and, crucially adjust their product portfolio to exploit their capabilities and experience.
I know of at least one company, supplying a unique range of insulated, environmentally-friendly products to the construction industry, which is already well-placed to grow post-Coronavirus as the Government seeks to stimulate the economy, jobs and housebuilding. Build Homes Better proposes to use its technologically advanced products to build environmentally and energy efficient housing based on its rapid building system. Check them out at https://buildhomesbetter.co.uk/
The time has never been better for a revival in UK manufacturing with innovative solutions for both new products, developing a greener economy and for strengthening the in-country supply chain.

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Coronavirus Business Interruption survival will need agility not pride

Agility is essential for business survivalArguably, all successful businesses need to exercise agility in a fast-changing world, but never more so than now in the midst of the Coronavirus pandemic.
While there is nothing wrong with having pride in your business, pride is also associated with sticking doggedly to a plan that is not working due to a change of circumstances. Just because you have always done things one way doesn’t mean that way is always right in normal circumstances, let alone in abnormal ones like the current situation. In a crisis everything you do should be challenged and often fundamental change is necessary if a business is to survive.
Business agility is therefore a key attribute for dealing with adverse circumstances, to be creative and adapt to the changing environment. This in particular applies to three main areas: staff, customers and processes.
Social distancing has meant that for some businesses their staff have had to work remotely while others are needed in the office to maintain systems. This has involved setting up new policies to protect staff who need to come into work, while at the same time making it possible for others to work from home and keep in touch. Equipment for remote workers, remote access to central servers, online security, new ways of working together and new forms of communicating have all had to be learnt very quickly. Better this than some companies who simply closed their doors when the big bad wolf began prowling.
There are terrific examples of firms that have adapted by changing their business completely such as restaurants that have switched to offering ready-meals for either collection or delivery, enabling them to keep going after they were forced to close their doors as part of measures to contain the spread of the virus.
Others, among them distilleries, have switched their production lines to manufacture such products as hand sanitisers and engineering firms that now make ventilator equipment for hospitals.
Some clothing manufacturers have switched to producing hospital protective clothing of various types.
A wholesale bakery client has had to replace its traditional hotel and restaurant market and now supplies market stalls, independent retailers and farm shops with its turnover nearly back at pre Coronavirus levels, all in six weeks and very different from their initial assumption that they should cease baking.
Another client, a plant and equipment rental company, now supplies the new Nightingale hospitals when it too had assumed it should close down.
A local pub now sells garden bedding plants from its front gate and has shown far more initiative than the local garden centres that have all closed down.
With consumer behaviour having radically changed as a result of the self-isolation rules, many retailers have massively increased their online presence, although it has to be said that when people are worried about their futures and their finances there will inevitably be a reduction in the purchase of non-essentials even online.
Perhaps the most agile and innovative have been the smaller SMEs, particularly tech support companies and gyms, who have taken their services online, producing regular teaching and remote IT problem solving services to help people. Many have offered a combination of part-free and part paid-for services, which are likely to be remembered by those they have helped once life has returned to normal, however different that “normal” may turn out to be.
As economies move out of the containment phase and some restrictions are loosened or removed altogether, your business will need to remain agile. There is some good advice from Accenture here.
It will not be a case of returning to the status quo-ante and it is too soon to be able to assess how customer and client behaviour will have changed in the medium term, so it may be that your business will have to develop a permanently agile mind-set in order to survive and remain resilient in the face of changes in both consumer behaviour and structural change in industries and the economy.
This may mean changing your business model and plan and paying much more attention to markets and demand.
A prerequisite to surviving a crisis is the ability to overcome the natural feelings that can overtake rational thinking. Emotions such as fear and anxiety relating to the unknown, the unanticipated event, a loss of control and unpredictable outcome are all natural but they need to be suppressed to allow rational behaviour and creativity to emerge as the way of finding solutions and new initiatives for dealing with the new circumstances.
It doesn’t matter that many initiatives won’t work so long as pride doesn’t get in the way and you acknowledge you were wrong and try something different. Paralysis and inaction are the real enemy.
For details and my free guide covering all the government Coronavirus Interruption Support initiatives check out the Online Turnaround Guru website.
While it is fine to have some pride in how you may have steered your business through the early stages of this crisis and survived, it is worth remembering the old saying “pride comes before a fall” so it is worth remembering the lessons we gain from experience. And, while we don’t know what we don’t know, we can always keep looking for answers and keep asking questions.

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Business Development & Marketing Cash Flow & Forecasting Finance General

How will consumer spending change as a result of the Coronavirus pandemic?

consumer spendingConsumer spending has become much more restricted during the Covid-19 pandemic safety measures, but will it lead to a permanent change?
From March 21, all non-essential businesses in the UK were forced to close, from hospitality, restaurants and fashion retail to car dealerships and holiday travel companies.
At the same time, many businesses have had to furlough staff and a substantial number of people have sadly lost their jobs altogether.
Inevitably the reduction in income through furlough and loss of jobs and restrictions on going out due to most of us being confined at home are having a huge impact on consumer spending.
It is no surprise, therefore that in March, demand for new cars from private buyers fell by 40.4%, while fleet registrations dropped by 47.4%.
According to Essential Retail the food retailers have clearly benefited both in-store and online to the point where they have had to limit supplies of some products and sign-ups of new online shoppers, however the picture for non-essential retail spending is significantly different, even for those retailers with considerable online and delivery capabilities. Purchases have plummeted.
It says: “People are scared to spend money that’s not essential,”
But as the situation continues, it argues, there is likely to be a greater need for certain non-essential items. Examples include exercise and hobby equipment, gardening products and home improvement materials.
The question is whether all this will lead to a more permanent change in consumer spending once the crisis is over.
According to Paul Martin, UK head of retail at KPMG, Covid-19 will precipitate a rapid increase in e-commerce activity that may persist long after the event, not that this has happened yet.
No-one knows yet how many of the currently closed SMEs will survive the current limitations and much will depend on whether such consumer and business activity will return to normal once the restrictions are lifted. But those of you that do survive will be well-advised to develop an e-commerce proposition if you don’t already have one. The rapid growth in our use of online conference facilities for video meetings that in the past were physical meetings could be an indicator of one change to our normal behaviour where the number of daily meeting participants using Zoom has risen from 10 million to 200 million in a month.
A major factor is the possibility that unemployment rates may rise substantially which will be down to two factors: staff reduction by surviving businesses; and job losses due to insolvency, both of which are likely if there is a delayed or slow return to normal activity.
Another unknown quantity is whether consumers will be more selective about what they purchase having discovered how much they can do without while they have been forced to stay home.
Once the pandemic is over, it is also likely that environmental concerns will rise up the agenda again, making people more wary of re-joining the previous “throw-away” culture.
It will be a while yet before the situation becomes clearer but it is likely that the current crisis will have a significant impact on both the mechanisms and the volume of consumer spending.