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Resurging tech companies supply and demand in the midst of Covid-19

Filed on September 13, 2020

(KT file)

Tech companies need to assess how they can continue providing support to customers in sectors that require service offerings

The detrimental effects of Covid-19 on societies and organisations have forced the need to take every possible mitigating measure to maintain some form of normalcy.

As uncertainties persist due to the unpredictable nature of the pandemic and increasing economic volatility, the realisation for companies that further steps must be taken to ensure business continuity looms larger every day.

The Middle East tech industry is no exception, and, considering its vital importance in ensuring governments remain responsive, businesses operational, and individuals connected, the onus is on tech companies to continue acting swiftly and decisively. Besides upholding their commitment to serve customers in light of demand shifts, they must also minimize all associated risks for employees and themselves. As they look ahead while strategising, two areas have posed implications for entities across the region:

Supply-side - Tech industry supply chains have experienced varying levels of shock since the start of the year. Enterprise, networking, and data-center hardware companies, in particular, have taken substantial hits due to supply shortages, as have producers of smartphones, tablets, and wearables.

Demand-side - Powerful shifts in demand have occurred amid mounting concerns about an unfolding recession. Budget restrictions have profoundly hit end-user device demands as customers refrain from new purchases and replacements. In turn, remote working, social distancing, and self-quarantine directives have driven an unprecedented rise in demand for cloud-solutions-related hardware to support customer needs.

In light of the challenges they have faced up to this point, leaders of technology companies have demonstrated intuitiveness by implementing prudent strategies to help their respective businesses navigate the rapidly changing environment. Admirably, they have maintained business continuity, boosted operations in critical areas, and continuously monitored and adjusted R&D, engineering, manufacturing, and logistics capacity and processes to meet demands.

Now is the time to build on the responsive foundations that have been established in recent times, and tech companies should immediately begin to consider the necessary structural changes that will ensure their companies can survive and succeed in the post-pandemic business environment. For starters, those with supply chains that flow through profoundly affected areas will need to conduct inventory planning and collaborate with suppliers and logistics partners. By doing so, they can ensure production stability, and tech leaders should mandate that products be moved closer to locations where they are required to deliver critical components with reasonable lead-time.

Companies should also work to shape online demand in the right direction to ensure they have the capacity and processes to accept and deliver online orders. Additional resources may be required for virtual stores, e-sales capabilities, and working with logistics partners to guarantee they will be able to accommodate order increases. Therefore, organizations should actively monitor and adjust the supply chain as production increases, establish a virtual control tower to provide end-to-end supply chain visibility and collaborate with suppliers to rebuild inventory levels, gain access to capacity, and implement processes to enhance resilience. It is important to note that failing to address these points sufficiently may result in missed opportunities to rebound and the risk of falling behind competitors.

At the same time, remote services are essential, and tech companies need to assess how they can continue providing support to customers in sectors that require service offerings. This entails technology and infrastructure investment, adequate staff training, and adhering to all safety measures issued by local and federal authorities where critical on-site services are required. Moreover, tech companies should also look to invest in additional resources, considering the new reality of consumer preference towards e-commerce. Tech companies should consider negotiating contracts with logistics partners to ensure adequate capacity and consistency of delivery is feasible, as well as carefully diversifying the geographic location of warehouses

Looking ahead from the eventual emergence of the ongoing difficulties, there are numerous viable avenues for tech companies to explore, which will allow them to expand their capabilities while simultaneously improving their structure. Doing so will ensure they will be fully prepared for tomorrow's business environment, one in which an array of exciting opportunities are sure to present themselves once again.

David Panhans is the managing director and partner at BCG. Views expressed are his own and do not reflect the newspaper's policy


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