Managing and Surviving Inflation

Operating in today’s uncertain environment, requires that leaders must think about performance in much broader terms. leaders must lead with the complete slate of stakeholders in mind. There are many conversations and decisions that only the CEO can make.

Corporate leaders can start by asking themselves key operational questions such as:

  • Where will customers see value in this new environment?
  • How  can products, services, and experiences be redesigned to deliver value?
  • What is the fastest way to find stability? What capabilities needs to be increased improve resilience and control costs?
  • How can procurement help create value?
  • How can talents be attracted and retained in the shifting labor market? 
  • How should repricing be pursued in an inflationary environment?

Redesign product and service offerings for value and availability
Redesigning products and services are critical because of the scarcity of components and higher production/service costs required to maintain the core functionality customers desire. Organisations must:

  • Quickly redesign products and services to adjust to new realities.
  • Adopt conservative methods of production. Challenge the current process to
    eliminate historically high costs of inputs. 
  • Redesign the service or product delivery system. A Change in packaging
    materials for instance could significantly reduce cost of delivery.
  • Promote near-substitutes, often private-label alternatives can be sold at lower
    costs than branded products. These substitutes maximize margins and
    increase the value to customers.

Fastest way to find stability

  • Identify and manage potential supply chain risks Depending on a company’s sector and needs, A range of risks must be considered, particularly those involving finance, regulation, reputation, and data security. Controls and options must be put in place to minimize the impact of these risks?
  • Transform procurement to create value, not just cut costs. During this period, critical supplies would be scarce or even unavailable at any cost within needed lead times. Prices for nearly all supplies would have risen in tandem with inflationary trends globally. Purchasing strategic would need to change focus from cost to creating value and helping the organisation succeed, for example products could be sourced locally instead of importing from abroad.
  • Vertical integration. Companies could consider making acquisitions to control value chains for key products. Automotive manufacturers for instance could
    consider contracting directly with manufacturers of key components of their processes to reserve capacity.
  • Investing in technology and process automation. Applying robotic or intelligent automation to make work processes faster and smarter while keeping operating costs low. Through process automation, employees can better serve customers and drive growth. The organization also becomes better equipped to compete by leveraging new digital capabilities and talent.

Examples of common business processes used by companies include onboarding new employees, fulfilling customer orders, processing expense
reports and approving loan applications. Automating these types of processes can increase available time and resources, and enable employees to focus on
core activities rather than tedious, repetitive tasks.

Attracting and retaining talent

Human capital costs are one of Organisation’s biggest costs. Wage increases put pressure on a company to maintain margins potentially by increasing prices. At the same time, wages and benefits are important to attract and retain employees. To rebuild relationships and retain current employees while attracting new ones, CEOs must guide their companies to take a new approach to talent, focusing on the following core principles:

  • Asking employees how they’re doing,
  • What they need, and
  • What aspirations they may have for other roles?

Repricing to strengthen customer relationships
Pricing is a fundamental question in inflationary environments. As costs rise, repricing to sustain margins is a difficult decision for many organisations. Companies that consistently address total customer requirements and product profitability are likely to weather inflationary cycles better than those that focus solely on cost changes. Repricing in response to inflation is full of unintended and unexpected consequences.

To manage price increases well Companies must have a mechanism that can respond quickly to feedback from customers and markets. This will help keep one eye on short term margins and price fluctuations and the other on strengthening ties with customers and communicating value more effectively.






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