Businesspeople work through factory corridor discussing business operations

Managing your business in uncertain times

Managing your business in uncertain times

The global economy pivoted from a decade of relative stability into uncertain times of economic turmoil, value chain disruptions, increasing political polarisation and unknown climate change impacts.

Inherently, predictions and forecast reliability is reduced, whereas shocks are easier and faster to emerge with presumably ever higher impacts. Economic shocks resulting from changing macroeconomic variables and interdependencies hit business and operations strategies unprepared. The recent year stands as an example where yet unstable supply chains and dramatically increasing energy prices drove costs upward, resulting in inflation rates above 10% and stagnation and recession scenarios for the economic development in 2023. Looking at some facts about the drivers in detail:

  • The well-established supply chains have not recovered from the COVID-19 pandemic disruption, and the schedule reliability in early 2022 (the share of shipping arrivals and departures being as scheduled) was below 40%
  • The gas price (TFF) rose by more than 400% in 2021 and was volatile in 2022 because of supply security risks and anticipated supply gaps
  • The inflation rate has quickly risen above 10% in Europe and will remain above 6% in 2023
  • The GDP growth for 2023 of the euro area is at 0.48%, whereas the German growth is at -0.3%
Graph explaining how the management strategy and system safeguard the operability and secure production effectivity and efficiency

Energy costs have been managed in Europe by several measures, including the gas supply chain adaption and saving efforts which have been supported by a relatively mild winter. The economic outlook remains however uncertain, and unforeseeable impacts can quickly accumulate and cause the next shock. Workforce availability, supply chain reliability and emission costs are stress factors which need to be accounted for, in addition to the higher energy and supply costs. The Council of the European Union advises Europe to shore up self-reliance to build resilience against external shocks. Similarly, business management needs to adapt its strategy to the economic outlook and increase its operational resilience to mitigate impacts.

What is the best current remedy to handle the impacts thrown at your business?

The answer is not clear cut. It is rather a combination of proven measures than a single silver bullet.

  • Keep an eye on the efficiencies. Promote productivity and energy efficiency to reduce dependence on resources, save costs and fully utilise the capital intense assets
  • Supply chain resilience. Focus on regional diversification and a healthy balanced number of suppliers, self-reliance on energy wherever possible, and long-term contracting
  • Flexible inventory adjustments. Depending on the situation, adjustments required to the supply stock, including DoS adjustments and criticality analyses on an ongoing basis
  • Holistic planning approach. Horizontal and vertical sales integration for holistic production planning and exploring new sales channels coupled with the ever-important analysis throughout the full sales process, making sure to stop any margin bleedings
  • Digitalisation and automation. Explore levers to boost business efficiency and performance with fast performing and swiftly implemented solutions to speed up reaction time and service levels whilst reducing costs
  • Take a critical view of your budget. Instead of gradually adopting the budget to new cost realities, critically review the building blocks of your budget at an appropriate detail level from scratch
  • Employer attractiveness. Ensuring attractiveness as a modern employer through fostering of empathic leadership and investing in talent retention. And never forget, the crew looks at the captain in uncertain times – being an example in terms of leadership is definitely required

Precise mid- and long-term economic development cannot be predicted but can be anticipated. Economic uncertainties and market opportunities point to increased dynamics in the industry that will inevitably hit companies and businesses. Managing those dynamics raises the importance of well-structured management systems that can raise the readiness and preparedness for future disruptions and prepare for the uncertain. Look out for our next posts, where we will discuss them further.

Two men in factory

Bioindustry Operations

We are unlocking sustainable high-impact value solutions based on deep process industry knowledge, thorough analysis and hands-on client support. Effective and tangible support at the intersection of strategy deployment, operations and technology delivering our very best, from large-scale operational, organisational and digital transformations to specialised solutions.

For more information, please contact

Stefan Kucher - Director, AFRY Management Consulting

Stefan Kucher

Director, AFRY Management Consulting

Contact Stefan Kucher

For sales enquiries, please complete this form. For all other enquiries, please visit our office and contacts page here.
Jakob Redlinger-Pohn - Consultant, AFRY Management Consulting

Jakob Redlinger-Pohn

Consultant, AFRY Management Consulting

Contact Jakob Redlinger-Pohn

For sales enquiries, please complete this form. For all other enquiries, please visit our office and contacts page here.
Alexander Pohl - Manager, AFRY Management Consulting

Alexander Pohl

Manager, AFRY Management Consulting

Contact Alexander Pohl

For sales enquiries, please complete this form. For all other enquiries, please visit our office and contacts page here.