Desperate times call for desperate measures – as with any recession or economic downturn, these words ring truer with each passing day spent in economic uncertainty. Beyond such ambiguity, the COVID-19 pandemic also resulted in the imminent and mandatory reorganization of day-to-day business activity.
Once again we had the privilege of moderating yet another exclusive chatroom, during which the effects of the worldwide pandemic, primarily on the logistics industry, were subject to discussion. We would like to thank our participants for contributing:
Before and after COVID-19
- István Csépán - Regional Director – EMEA, UTC Overseas, Inc.
- István Lenk - BSC Operations Manager / Site Leader, Eaton
- Éva De Rossi – Partner at Synthesis Audit Tax and Law
- Frido Diepeveen – Managing Director, Diepeveen & Partners Kft.
- Richárd Ránki – Director, HOA – Hungarian Outsourcing Association
- Emese Pataki - Senior Business Consultant, Service Centers Expert, Knowledge Pyramid Kft.
- Monika Slomska – Moderator, Managing Director, Knowledge Pyramid Kft.
To anyone not familiar with logistics, the business model of UTC Overseas may not just seem surprising, but also simple and sensible. UTC Overseas can be described as a “middle-man”, a sort of mediator between parties that does not transport goods – instead, it essentially functions as an expert in logistics networks. The added value is realized through the offering of reliable and competitive recommendations related to client-oriented transportation solutions.
Before COVID-19, the company had to deal with daily competition against formidable rivals, geography-dependent restrictions, and the management of over 40 offices worldwide. Even though the switch towards mandatory Home Office (HO) went considerably well due to a high level of IT preparedness, challenges related to internal and external communication surfaced immediately.
Regarding internal communication, István Csépán emphasized that in their line of work office presence is critical due to the widespread presence of paper-based processes and the necessity of efficient employee-to-employee interaction. In order to facilitate efficient communication in-line with industry standards, the company instated the holding of mandatory meetings, twice a day, so that teams be able to sort out their issues in relation to relevant problems in an effective manner.
While internal communication is the key for having efficient workflows, external communication by itself is considered a game changer. Firstly, Mr. Csépán emphasized that the switch towards HO had to be done in a way that, from a client’s perspective, no change should have been noticeable. Secondly, the way such a company like UTC communicates with customers must be approached with extra care. Client relationships need to be managed well due to the current volatile business environment, which can lead to unpleasant frictions between parties. As an example, price quotations handed to clients nowadays may very well change frequently depending on a variety of factors. Consequently, client relationship management has taken its place at the forefront of priorities, which also manifested itself in the pricing of services.
When it came to Eaton, István Lenk did not hesitate to offer an insight into the logistics-related struggles of the past months. As an example, the COVID-19 induced drop in customer demand resulted in a lower need for production, which warranted the shutdown of a France-based factory. In another case, an Italian plant had to be closed due to peoples’ mounting fears of infection. Beside such unconventional occurrences, CAPEX-and investment related cost-cutting and liquidity retention have become the norm, at least until sales targets can be expected to reach desirable volumes.
Virtual jobs and office spaces – What does the future hold?
The Chatroom also focused on the significance of HO, which was approached differently by our participants. István Csépán highlighted how the need for highly efficient internal communication, employee presence, and a high number of paper-based processes might limit HO adaptation in purely logistics-related positions. In his reasoning he emphasized the importance of maintaining fruitful client relationships during dificult times. On the other hand, István Lenk views the COVID-19 pandemic as a test opportunity which will enable SSCs to define roles that are able to function flawlessly in a HO environment. A successful “test period” would result in Eaton being able to offer higher-value employment opportunities in its offices. In the end, identifying the optimal mix of quality, language skills and value creation for different roles may also result in a decreased need for large office spaces and better employee retention.
It was agreed that having realistic Disaster Recovery Plans, preparing for worst case scenarios, and preserving funds for difficult times should be a top priority in any business. According to Mr. Csépán, industry and firm characteristics also have a say in how well a company can manage itself under economic uncertainty – smaller firms, for example, might be able to detect the consequences of good/bad decisions earlier compared to bigger rivals. Everybody agreed that solidarity in business is key towards preserving long-lasting client-and partner relationships.
We would like to thank our participants once again for having the interest and motivation to participate in our Chatroom. Knowledge Pyramid Kft. truly believes that by hosting exclusive chatrooms reserved for a small number of top leaders it becomes easier to facilitate an honest and friendly conversation.