Leadership 4.0 Rising above the waves
The global COVID-19 crisis does not only have tremendous impacts on our health and safety, but also on businesses. The global supply chain has been affected by extended shutdowns affecting transportation infrastructures and manufacturing plants, which have led to shortages in goods and materials. Business models have been disrupted and reinvented to fit the new normal. Dr. Thavirap Tantiwongse, CEO of Pharmaceutical Research and Manufacturers Association (PReMA) explains strategies for business adaptation and what needs to be done to get business owners through this crisis.
Dr. Thavirap Tantiwongse, CEO of Pharmaceutical Research and Manufacturers Association (PReMA)
Innovation-centric organizations need to have Total Quality Management (TQM)
Peter F. Drucker, the father of modern business management, once said every decision made by an organization is full of risks because decisions are based on the use of resources available today that will affect the uncertain and unpredictable future. “Long-range planning does not deal with future decisions, but with the future of present decisions.”
The core of running a business is essentially holistic risk management. The COVID-19 pandemic has disrupted many businesses, but not PReMA members.
This is because PReMA members are multinational medicine corporations which have integrated efficient TQM and risk management into their business. Successful global supply chain management requires intricate logistics planning, inventory risk assessment, sourcing system, and quality control to remain responsive to the dynamic market demand. Companies usually have these designed and laid out in their service blueprint before they venture into a new market.
“Businessmen seek opportunities from risks and turn them into profit”
– Dr. Thavirap Tantiwongse
Since most drugs are patented, the manufacturing process needs to be controlled by the patent owners themselves. Drug companies need to carefully forecast the market demand, then plan their production and shipment according to the forecasts. These are the key elements of TQM which allows them to minimize the impact from the changes in demand. During the outbreak, these companies did not face any drug shortage problem and could still supply enough medical tools and equipment, such as face masks, ventilators, and medicines, to donate to medical personnel.
Risk Management Principles
For high-risk products, risk management is typically supported by 2 main systems:
The aviation industry has some good examples of risk management. It follows the Duplication system where there are usually two pilots on the plane. If there’s an issue with one, the other pilot will be able to take over.
Planes usually have backup electrical and hydraulic systems to reduce the risk should one of the systems become dysfunctional or out of commission. Passengers are also asked to open their window shades in case there’s any complication outside of the plane. This is an example of the Redundancy system.
Risk management depends largely on how a business operates. Some may focus on controlling costs and prioritizing cheap materials and transportation over quality. PReMA members are drug research and development companies, which have direct impacts on people’s lives. Quality, safety, and innovation are therefore top priorities that demand thorough risk management.
Post-COVID-19: Business Continuity Plan (BCP) is the new normal
After the lockdown, some businesses had to stop operating because they didn’t have a Business Continuity Plan (BCP) to shield themselves from the crisis. A BCP is basically thinking ahead about how you will handle the situation if there’re any unfavorable occurrences in the future, like a second wave of the pandemic.
Companies with a BCP tend to have more resilient business operations. When the COVID-19 outbreak forced a lot of companies to work from home, many had to evaluate whether or not they had invested enough in their internet, intranet, and video conference systems. Those who were not prepared had to seek third-party services like Zoom and ran into data security issues. KFC, for example, already had a solid system around their food delivery model, which became their lifeline during the crisis. Some who were not prepared had to start learning from the beginning to build a new system. A BCP helps prepare us for crises and reduces their impacts on businesses.