It is a daunting task to plan for the new normal, mainly because we do not know what that new normal will look like. Are we already in the new normal? Is there still hope for further improvement? We are still losing 300 or more souls to COVID every day. We are still logging close to 100,000 new COVID cases a day. Is this the new normal that we must accept?
No one really knows the answers. Only a fool would claim to have those answers.
Be that as it may, businesses cannot plan one day at a time. They must devise 3-year plans or 5-year plans. They have to submit budgets to support those plans—all with at least some degree of confidence.
I do not envy them, but I empathize with them because we are exactly in the same boat here at Strategic Systems Group (SSG). Because although some sectors of the economy are hurting more than others, no one is immune. And, dear reader, I assume that you are, too.
We are all…
Planning for Growth During a Pandemic and Global Uncertainty
I grant you this: Planning for growth during a pandemic is a nightmare. Should we plan for the best or plan for the worst? Should we have two forecasts? One for the best-case scenario, one for the worst-case scenario? Can we forecast a YOY double-digit revenue increase as we have in the past, knowing that staffing shortages may not support that growth?
If we had listened to the so-called experts who last September predicted that freight rates would decline by the end of 2021, our forecasts would have been way off because here we are in August of 2022, and freight rates are still not declining at least not appreciably. Not to mention the fact that some of those small declines were offset by a rise in insurance costs due to the Russian invasion of Ukraine.
I also grant you this: Budgeting and Forecasting has always been based on some level of guesswork. So perhaps we throw caution to the wind, use the H1 figures that we all have by now, and forecast based on those numbers. That is one option.
The other option is that we develop a forecast based on breaking even. That way, we have a fair chance of coming in slightly below or slightly above the forecast. I would venture to say that this is a reasonably conservative approach.
Factors to Consider When Planning for the New Normal
Our clients are mainly manufacturers and distributors. We chat with clients in the manufacturing and distribution sectors every day. And what we hear from them all is that staffing shortages and supply chain disruptions are the two top issues they are struggling to overcome. So, when considering the main factors when planning for the new normal, we look at it through that lens.
Staffing Shortages
There is no logical reason to believe this situation will abate any time soon. That is because there is no logical reason for the staffing shortages in the first place. Yes, we understand that we are still in the process of emerging from a pandemic. Yes, we know that people exhibiting symptoms are required to stay home from work. Of course, they should.
Yes, we have listened to the claims that people can make more money by collecting unemployment payments than they can make at a reasonable job. But collecting unemployment is finite. So once again, I do not understand how that translates into long-term staffing shortages. Call me a “doubting Thomas.”
Still, none of that can account for the level of staffing shortages that we continue to see and hear about from colleagues in the tech industry and many others, including our clients in the manufacturing and wholesale distribution sectors.
The long-term health of our economy is at stake. So, if we must accept that staffing is going to be a long-term problem, we must look for ways to resolve the problem. We must think outside of the box, perhaps way outside of the box.
Could we, for example, offer paid internships with the promise of a career path that would open up at the end of the internship? Could we provide more training? Can we offer a living wage that would compete with the level of unemployment benefits? Can we move seasonal workers into full-time positions with the lure of healthcare coverage?
Supply Chain Disruptions
We cannot keep blaming the pandemic for all of our woes. We understand that significant shipping and drayage backlogs occurred when the world shut down. And yes, we saw American ingenuity at work.
I am referring to this…
A Wall Street Journal headline in October 2021 told us what many of us already knew: “Biggest U.S. Retailers Charter Private Cargo Ships to Sail Around Port Delays.”1 Yes, Home Depot, Costco, and Walmart all resorted to private charters in a push to stock their shelves for holiday shoppers.
But realistically, how could private charters “sail around” port delays? And even if this “trick” worked for the 2021 holiday season, would not more ships on the seas just contribute to the problem instead of solving it?
Perhaps if, instead of dealing narrowly with their own supply chain issues, which one might see as selfish, these retail giants got together with logistics specialists to seek answers to the global problems of costly supply chain disruptions and delays, then we might actually see some progress.
Just saying…
Wrapping this Up
As a company that implements and supports top ERP (Enterprise Resource Planning) software systems such as Infor and Microsoft Dynamics for clients in the manufacturing and wholesale distributions sectors, we at Strategic Systems Group (SSG) are keenly aware of their need to find solutions to the staffing shortages and supply chain issues they are facing.
In some cases, software systems that include HR (Human Resources) management and SCM (Supply Chain Management) can mitigate the severity of staffing shortages and supply chain disruptions. At the very least, they can help you find areas to cut costs and increase efficiency so that you can continue to operate in the black despite the issues that are impacting your revenue and profit margins.
To learn more, please get in touch with us.
Call Strategic Systems Group (SSG) at (310) 539-4645 or reach out via our contact form today!
Related Post
Workforce and Business Process Optimization = Better Business Outcomes
1Biggest U.S. Retailers Charter Private Cargo Ships to Sail Around Port Delays – WSJ