Reflections on the European market

War, energy shortages, disrupted supply chains, re-allocation of demand and inflation are putting pressure on European markets. Three experts discuss how European companies should approach the future.

NAME: Rafael Renaudeau

COMPANY: Nynas

TITLE: Director of Strategy, Sustainability and Transformation

BACKGROUND: Rafael has held numerous managerial roles within Nynas over the past 20 years. An engineer educated at the Ecole Nationale Supérieure de Chimie de Montpellier, he completed an MBA at INSEAD.

“Be flexible and identify opportunities in the midst of the crisis”

“Businesses across Europe are being confronted by a number of simultaneous crises, including war, energy shortages, Covid-19, technological disruptions and climate change. The result is rising costs, labour shortages, supply chain disruptions and, ultimately, a weakening in demand.

In addition to short-term convulsions, business is being disrupted by long-term trends that nevertheless require immediate action: the current energy crisis cannot mean that we lose sight of the adaptions needed for sustainability.

In order to survive, businesses will need the ability and flexibility to weather crises over an extended period of time. Decisions need to be made faster, and in such a way that companies will keep the option to change course relatively easily if required. All aspects of the organisation must be looked at – not just the structure and strategy, but also tools and processes, culture, skills, leadership style, etc.

In particular, the old-school strategic process needs to be revised – it can no longer be a five-year plan that is updated only marginally on a yearly basis. Instead, it must focus on building a common understanding of the business among the leadership, identifying and monitoring trends through signposts and trigger points, as well as building scenarios rather than plans.

Business leaders must seize this opportunity to really challenge their resources, operations and activities in order to identify opportunities in the midst of the crisis.

At Nynas, we are seeing opportunities for our products and know-how, both today and tomorrow. The changes that we are currently implementing are all aimed at focusing on those areas where we can make a difference, and at building the organisation and the capabilities required to be successful in a bumpy environment.”

 

NAME: Bindiya Vakil

COMPANY: Resilinc

TITLE: CEO

BACKGROUND: Supply & Demand Chain Executive’s inaugural Woman of the Year in 2020; Founding member of the Global Supply Chain Resiliency Council; Member of the Advisory Board of MIT Center for Transportation and Logistics

“Having a supply chain resiliency program is the most effective way to adapt to the current crises”

European businesses must continue to invest time in monitoring solutions if they are to understand and mitigate supply disruption, allowing greater oversight over weaknesses within a given supply chain.

Having a supply chain resiliency program is the most effective way to adapt to the current crises we find ourselves faced with. When real-time event monitoring and alerts are paired with supply chain mapping down to part origin for single-sourced parts, companies are able to get ahead of impending crises.

Almost every large company today conducts extensive due diligence on suppliers before selecting them. This will continue to be important throughout 2023, with additional environmental, social, and corporate governance being introduced at the start of the year in Germany via their Supply Chain Due Diligence Act.

No business can predict the future, but it can take steps to ensure that it’s ready to act quickly, at the first sign of trouble. Supplier mapping is an easy win for CEOs in Europe and elsewhere looking to prepare for 2023. Rapidly evolving technology, AI, cloud adoption, and enterprise networks have all contributed to making mapping costs effective, scalable, and achievable.

Procurement teams typically pay attention only to the top 20% of suppliers which make up 80% of the spend, but this means a significant risk remains as there’s zero visibility over the 80% of suppliers who make up the other 20%. Changing this strategy will be the single most effective way to increase resilience in 2023.

 

NAME: Julio Bruno

COMPANY: Mercato Metropolitano

TITLE: Chairman

BACKGROUND: Board Director of Pacha Group, a global entertainment and luxury hospitality platform; previously executive positions at TripAdvisor, Travelport, Regus, Energizer and Diageo and CEO of Time Out

“Companies should be looking to outsource work wherever they CAN”

“What is sometimes known as “the great resignation” but I call “the great reassessment,” as people reassess their lives and their careers, means that businesses have to ensure that they can offer their employees flexibility but also a sense of purpose in their working lives. People don’t just work 9-5 and then go home and forget about it – they’re thinking about work over the weekend and sending emails at 8pm these days. They want to work for an organisation that matches their own values and businesses across Europe need to recognise that. Don’t forget – your most talented people have the greatest opportunities elsewhere.

As well as managing talent, successful businesses will also be those that manage their cash more effectively over the next year and beyond. It’s often said that “cash is king,” and that’s never been truer than it is today. It’s important therefore to avoid expenditure, especially capex if possible. Companies should be looking to outsource work wherever they can and to avoid long term financial commitments – it’s better to renew a contract every month than every year.

There will be many more businesses throughout Europe looking to sell and prices will fall. This means that those companies that do have money in the bank and healthy cash flows are in a particularly good negotiating position at the moment to make acquisitions – but, of course, only if that acquisition complements their existing capabilities.”

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