A few days back, COVID – 19 was forcing Ford to shut down its plants, and the management was probably thinking how to conserve cash and stretch it out. Two days later, they announce that in partnership with GE and 3M, they will manufacture ventilators and face masks to address COVID – 19, and the management was probably asking – do we have enough cash? We witnessed 3.2 Million first time jobless claims in the US – where the normal is in the range of 250,000. while Walmart and CSV are hiring 250,000 and 50,000, respectively. Healthcare providers are being called out of retirement, and many are coming out.
The COVID – 19 outbreak has accelerated and reinforced the paradigm “Planning is essential, plans are useless.” Or, as they say, “The best laid out plans will be dead on the first contact with the enemy.” Things are changing before businesses can understand the impact of the last change; forget about planning for it.
Organizations are making statements such as “we hope to make hundreds and thousands of ventilators in May.” It would sound more credible if they say- “Considering the material procurement lead time, production lead time, FDA approvals and overall capacity, we anticipate shipping our first lot of 1000 ventilators in the 3rd week of April. We will scale it up to 2000 ventilators per week by 1st week of May, and ultimately, ship 5000 per week from the 3rd week of May. We will require additional cash to the tune of X million USD and are working on it.”
As someone said – Many is not a quantity; soon is not a timeline, and hope is not a strategy.
It took close to two weeks to have a plan that said 50,000 ventilators in 100 days. One can conjecture as to when the first lot will roll out. Will some be ready in April?
What we need in the current times is the ability to deal with the new uncertainties that each passing moment can bring. It means being able to see what it will take to conserve resources like cash and workforce, where to put these resources, and the full understanding and ability to go back to the drawing board, without committing to the point of no return.
The ongoing pandemic has the potential to impact business growth for most industries, in an unprecedented way. Zensar is committed to stand by our customers during this unprecedented time. Zensar announces the launch of its COVID-19 Business Support for Enterprises, ZenTrust.
One of the offerings in our gamut of solution is Business Exposure Stress Tests (BEST).
Business Exposure and Stress Testing (BEST) is our platform to provide this ability- covering both how long can you run, what could be your bridge cash requirement, and what would your strategic level operational and financial plan look like, given the constraints of demand, volume, supply, capacity etc.
This platform helps by running simulations on your value chain and cost flow and gives a projected balance sheet and cash position. You can run the simulations for multiple scenarios covering demand, supply, capacity, and other constraints and formulate strategies to address the situations. This ability becomes more meaningful as the situation is changing by the minute. BEST can provide answers to questions like- will you have enough raw material every week to maintain the volume? What if the demand exceeds the capacity? What will be the committed cash flow if you are forced to slow down to, say, 30% capacity? Or, completely shut down? How much cash do you need for our cash spread (pay to supplier + Production lead time + receipt from the customers)? And many others.
BEST Response platform helps your business stay nimble and agile, especially in times of uncertainty and fast passed changes, and create realistic and achievable plans in these trying times. BEST Response is beneficial for manufacturers of critical medical supplies, healthcare facilities, manufacturers, and distributors of other essential goods and services.
Key Benefits that the BEST platform brings to you are:
- Multiple ‘What ifs’ and the ability to create scenario-specific strategies
- Ability to focus on the most likely scenarios and keep current with the volatility that may change the most likely scenario
- Delay commitment of scarce resources to the right time (not too early / not too late) and to the right strategy (capital/cash preservation/optimization)
One of the only certainties with the COVID–19 outbreak is uncertainty. And, each day adds or changes multiple dimensions around it, raising questions no one can claim to have the answers. However, the ability to run simulations quickly to understand the impacts and start putting strategies (without committing resources) with BEST helps businesses to increase their agility and readiness to act when a set of assumptions becomes a reality.