Businesses and economies around the world have been affected by COVID 19. While governments still try to determine how to handle the health concerns and keep their citizens safe, there is far reaching economic impact with the world entering a global recession. Private Sector has been impacted, and in the Caribbean we have not been immune. The CEO of one Trinidad and Tobago Manufacturers Association’s member organisation, an FMCG that operates in the Caribbean region, met virtually with the Project Team of Trinidad and Tobago Civil Society Organisations for Business. The discussion centered on what has been the impact on their operation, how they continue to manage this exogenous shock and what advice would they give to other firms operating in the Caribbean environment.
Employee Wellbeing
The organisation’s priority has been the wellbeing of their employees. Despite not having a formal work from home policy, the company’s policies allowed employees to balance their family responsibilities prior to Covid 19. This has been part of the organisations move towards building an agile company. Their agility was built in with the flexibility to choose the physical location of work, whether it is one of the work spaces in the company or at home. The policy also allowed employees to manage personal tasks during the workday and provided them with access to continue work at a later time, with the understanding that company objectives would still be met. This corporate focus on agility and the practice of working from home, meant that the movement to work from home as a result of Covid 19, was not a massive shift for the employees.
Initial employee concerns, at the announcement of the closure of business, were centered on how long the disruption would be. The company’s focus was on the best way to support their employees and provide a safe working environment for them. The CEO understood that “Everyone is in the same storm, but not everyone has the same boat.” Therefore, people would have varying circumstances at home, which would impact their ability to work comfortably and safely. The firm continued its commitment to being flexible and agile, by allowing employees take the ergonomic office chairs from their place of employment, to be used at home, and where required reimbursed staff for additional office equipment like printers and scanners. New guidelines were created for working at home to help ensure work life balance, by making it mandatory for employees take their lunch hour when most convenient to them and scheduling meetings so they do not begin before 9am and must end by 5pm.
The CEO acknowledged that these practices should vary by company and industry. He continued to add that, “Working from home is based on trust, and the organizational policy at a group level measures output and performance for productivity, rather than the number of hours worked. Having the correct performance management system helps determine if the team is able to deliver the objectives, which goes back to the recruitment process and hiring people based on values.”
Consumer Behavior
As a provider of Fast Moving Consumer Goods, the firm was greatly impacted by changes in consumer behaviour and had limited time to respond. There were sharp increases in products related to health and hygiene, given the increased focus on handwashing and regular sanitation. The restrictions on movement and closure of out of home food retailers, meant that most people spent more time cooking and eating at home. The increase in traffic to supermarket channels allowed them to observe some minor and major changes in consumer and shopper behaviors. While there was an increase in bulk purchases, shoppers preferred to purchase all items in one location, rather than visiting many retail locations to fulfill their shopping needs. This may have been as a response to the increased hassle of needing to line up and sanitise to enter each new shopping location. Alternatively, it could have been seen as the shoppers preference to reduce their risk of exposure, by visiting less locations to meet their home needs.
One major change was the move towards e-commerce by both the shoppers and the retailers. Established retailers stepped into e-commerce allowing customers to place orders online and collect items curbside at a convenient time. This change allowed new retail players to enter the market. The response from shoppers show that the market is ready for e commerce shopping channels for everyday items. As a major player in FMCG, the organization has been proactive with their observation of online shopping behaviour. They have created a portfolio of product photos suitable for online retailers in addition to their traditional point of purchase marketing material. While businesses have taken steps to return to normal, the organization is looking at those small signals in consumer and shopper behaviour and believe that the first retailer to effectively and efficiently manage orders, payment and delivery could change the retail market space.
Strategy
Scenario Planning and Business Continuity are now the buzz words of business as firms seek to stabilise their revenues and prepare for unexpected eventualities. As an FMCG Multinational Corporation, this organization has approached scenario planning in a novel way. Rather than having 2-3 scenarios for which they prepare, the organsiation has focused on building internal capabilities to allow them to respond faster to market changes.
The strategy team has finetuned their ability to detect weak signals in shifts in consumer, customer and retailer behaviours, and ensure that they are agile in their ability to make changes in their approach. The firm acknowledges their advantage of having major brands and alternate supply chain sources for the brands that the market knows and loves. “Supply Chain is seen as being as important as Sales and Marketing.”, said the CEO, and the firm has invested in consumer demand and supply chain management systems to assist in monitoring their needs.
While other local firms may not have a wide variety of options for new sources of raw materials, the CEO sees that Trinidad and Tobago is best positioned in the English Speaking Caribbean, to provide for and meet the needs of the Caribbean. Many regional firms are now faced with the problem of having their usual international supply chains interrupted. As a manufacturing hub in the Caribbean, many local manufacturers must meet minimum order quantities (MOQs) for raw materials. Given the relatively small size of the Trinidad and Tobago and Caribbean market, there are large stocks of raw material on hand, which the local manufacturers can now use to meet the needs of our regional neighbours. Given Trinidad’s generally stable exchange rate to USD, the low cost of production and the MOQs, local firms should be ready to increase production and meet the regional surges in demand with ease, and at a price point that is competitive.
As firms re-open, the business community is aware of the dreary economic scenarios, both locally and internationally. The CEO’s words of wisdom to local firms guide them to control expenses and manage their cash flows. “Scale back, reduce and defer discretionary spend. Run your business as you run your household.”
As someone who has faced three recessions in the Caribbean and Latin America throughout his career, he advises that there should be long term and short term trade-offs. “While reducing expenses, firms should look at long term investment in consumer communication, improving the route to market and ensuring that IT can support an agile company.” Seek to improve payment terms and invest in capability building throughout the organisation. It is important to invest in organizational capabilities, in a bid to be more agile. Capability building must include training, but it also includes infrastructural capabilities, particularly IT. Strong IT capabilities can be leveraged to reduce operational costs and provide employees with the tools to do their job, even while working from home.
As the CEO of a leading FMCG in the Caribbean, there is clear priority on what is important for their busines continuity. First, have the employee’s wellbeing at heart, through guidelines that keep them safe whether they work at home or in office. Secondly, return to the basics and conserve cash, this organization is debt-free. It is also important to look at changes in consumer signals, and support retailers as they also adjust to changing consumer and shopper needs. Finally, ensure that company capabilities are agile and ready for market changes by leveraging technology .
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