Optimizing business strategy via value chain and e-commerce

Well prepared even in times of crisis. Tips for a good business strategy.

The coronavirus crisis caught many Swiss SMEs off guard. They now need to rethink their own business strategies and prepare themselves for similar emergencies. This can be achieved in particular by focusing on digitalization, e-commerce, and the optimization of value chains.

COVID-19 pandemic has challenged companies' business strategy

"2020 will truly go down in the history books," said Burkhard Varnholt, Chief Investment Officer of Credit Suisse Switzerland, opening his speech at this year's GoGlobal Days hosted by Switzerland Global Enterprise (S-GE)*. The economic landscape in particular has experienced great volatility and uncertainty.

This posed challenges for many internationally active SMEs. Currently, turnover in the Swiss export industry is several billion Swiss francs below its pre-crisis level. In addition to unexpected risks, the coronavirus crisis has also created unique opportunities for Swiss companies, reports Burkhard Varnholt. In this context, digitalization in the business strategy stands out in particular. In addition, the expert believes that glocalization will also shape the way companies work together, create value, and design value chains.

Optimizing and planning: Value chain and e-commerce

Experts Christoph Wilhelm*, Urs Häusler*, and Ambassador Dr. Eric Jakob* know how companies can optimize their value chain and prepare for the next crisis. In an interesting panel discussion, they provided answers to burning questions and tips for a good business strategy.

Numerous Swiss companies are once again tightening up their protection concepts in view of the renewed rise in infections. Are Swiss companies prepared for a second wave?

Christoph Wilhelm: When I look back at what happened during the crisis, I would say that Swiss companies are not yet ready. COVID-19 has highlighted the weakness of the global, sometimes even local and national, supply chains of Swiss SMEs. There is a clear need for optimization here.

Urs Häusler: Some companies are better prepared, others less so. However, COVID-19 and the loss of all physical warehouses showed that many companies were not ready at the beginning of the crisis.

Ambassador Dr. Eric Jakob: To survive the next crisis, it will be important to continue the ongoing exchange between the economy, the various industries, the administration, and the population. I think maximum transparency is the most important thing. The federal government is tackling the key issues and measures on an ongoing basis. Right now, we know more than we did at the beginning of the pandemic. We know what works and what doesn't. And nobody wants a second lockdown.

How can SMEs start optimizing their value chain?

Christoph Wilhelm: Many companies often start by improving their cost management. I would advise against this for the time being. Cost management is a medium-term task and ties up too many resources. It is much more important for companies to be able to convert their incoming orders into sales as quickly as possible. Because a lack of liquidity is the worst-case scenario for any company.

Entrepreneurs should primarily focus on their risk management. For me, this comprises the following three key aspects:

  1. Transparency: You can only identify potential delivery risks at an early stage if you know exactly who delivers what and to whom. If you create internal transparency, it is easier to define who along the supply chain is responsible for minimizing risks.
  2. Sourcing strategy and smart storage: Analyze where the critical points in the supply chain are – down to the raw materials if necessary. Try to mitigate risks, for example by using multiple sourcing. Create a stock of items that are difficult to obtain or for which very long delivery times are common.
  3. Training for emergency scenarios: Be prepared for emergencies by regularly playing through emergency scenarios. This ensures that important processes function properly in an emergency.

The COVID-19 pandemic has driven digitalization in all areas. How can an SME achieve the greatest impact in digital optimization?

Urs Häusler: COVID-19 has shown that it is important for companies to prepare their sales organization in case physical transactions are not possible. Companies today need an omnichannel, or a hybrid channel. In addition to physical transactions, companies must also be able to sell their products or services digitally. This is paramount!

Also important are how internal processes are carried out and employees organized. As a result of the lockdown, many employees started working from home. Most Swiss companies were not prepared for this. If they haven't done so already, now is the time for them to take steps in this respect.

What should SMEs consider when it comes to e-commerce?

Urs Häusler: An entrepreneur should have a clear vision for the next seven to ten years. Where is my business going? How do I want to sell things? Where do my customers come from? Who are my competitors? The strategy loses importance compared with other priorities. Today you have to be flexible. Here are my three tips for Swiss SMEs:

  1. Be agile and react to crises as well as to new technologies.
  2. Divide your vision into steps. This way you can proceed step by step and regularly present and evaluate new results.
  3. Work together with experts. They have experience in developing digital products and e-commerce solutions.

How do you assess the current state of the Swiss corporate landscape and what does the future hold?

Ambassador Dr. Eric Jakob: We know that the global decline in trade has a historical dimension. However, we are pleased that Swiss exports recovered slightly in June and July. This is an indicator of international consumer sentiment, and so we do see a light at the end of the tunnel.

There will continue to be industries and companies that experience some hard times ahead. During the crisis, the federal government provided strong support in the form of loans and short-time working. We are now seeing the responsibility for further steps with the cantons. In addition, the parliament is taking decisions on additional measures. We hope that these measures will contribute to a rapid and sustainable recovery of the Swiss economy – and not to the preservation of structures. The Federal Department of Economic Affairs and SECO are also working to speed up further free trade agreements with countries from various regions of the world in order to facilitate access to these markets for the export-oriented Swiss economy.

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