How Process Intelligent, ML & RPA Fair in a Recession

Reading the news, it seems like everyone has a different opinion on what the economy will do next. Some are predicting a major recession, others a small recession and others define us in a “transitory” period. The key point being, that we are in a unique period and there is economic uncertainty on the horizon. With all these unknowns, it can be hard for company leaders to want to invest in large future initiatives with such a potentially stormy horizon. 

While there are no perfectly safe harbors, as spending priorities will vary based on the company, industry and their specific financial situation, I would argue that long-term successful companies will look at the current economic situation with a long-term lens. This isn’t just an opinion, during the 2008 depression, Toyota recognized the importance of their workforce and the opportunity presented during the decline in demand. 

"During the worst economic downturn since the Great Depression, we kept every one of our regular U.S. manufacturing team members employed, even as global auto sales plummeted," James said. "Instead of layoffs, we protected employees by adjusting production."And during production lulls, Toyota kept employees busy by offering additional training, devoting time to continuous-improvement projects and providing them paid time off to volunteer in the community” Staying True to the Toyota Way During the Recession by Josh Cabel

This approach ensures that as the economy recovers, there is both a ready workforce in place but also a more efficient workforce. Toyota was able to improve their internal manufacturing processes and assist in leaning out volunteer organizations.  Furthermore as seen during the Covid-19 pandemic, there will be issues in scaling back up operations once the market improves. 

So what are companies to do with this uncertainty? Toyota was in a fortunate position in the situation above, and we all have seen the effects of a slow rebound when Covid-19 demand spiked. My recommendation would be the following: double down on ensuring you have efficient operations, clear processes and automatons where it makes sense.

Improve Current Processes

In any market, there are ongoing changes to customer demand, but they occur over a long enough time horizon where businesses can be slow in responding. However, with any major market change (recession, panic, pandemic) that the market demand can drastically change. Therefore it is imperative to invest in understanding your current processes, documenting how work is currently being done, base-lining metrics and overall leaning out where possible. 
Once your operational processes are efficient, then you can start looking at how you can apply digital tools to bring this data into your planning processes better. A good example of this is leveraging order-to-cash (OTC) and procure-to-pay (P2P) process models into your demand signals for earlier detection of a demand change and alternative products which could satisfy customer demand. 

Automate Where Possible

The most unfortunate part of any recession is the human impact and in this case, those who will lose their positions due to reduced demand or changing business priorities. This is an unfortunate part of any enterprise, but in a recession there are typically fewer workers doing the same amount of work with ultimately lower performance and morale. 

“A key reason for this underperformance is that remaining employees are often forced to take on more work. This tends to leave them feeling burnt out, undervalued, and unmotivated.Automation does the opposite—employees are enabled to do more with less, and spend a smaller part of their workday on tedious tasks. Since they enjoy their jobs more and are gaining new skills, they’re more likely to stick around for the long haul and grow with the company.”

Here’s Why Experts Consider Automation “Recession Proof” by Bobby Patrick
Even in great economic times, automation should be a priority for every business as there are numerous tasks which need to be completed, but are more transactional in nature and not requiring human intervention. In a recession, this becomes much more important as there are fewer workers, more work and limitations on what the bottom line can support. Automation benefits are hard to quantify, but Forrester and Automation Anywhere report found a 6 month payback period and a 3-year ROI of 186%. Great statistics in the best of times, but could be company saving in the worst of times. 

Prepare for Demand Changes

There will be changes in priorities from customers and companies as their business needs change. I think back to the quote by Greek philosopher Heraclitus  “The Only Constant in Life Is Change.”  Judging by past major market changes, we can anticipate that the needs will change rapidly and in ways we would not have been foreseen.  Who would have imagined the hot items early in the Covid-19 pandemic would be N95 Masks and toilet paper?

Therefore, it is important now that companies prepare for this uncertainty. How quickly can you spot changes in your customer behavior and demand? Where are your critical materials and bottlenecks within your processes?  We tend to let processes slowly evolve and change over time as there is no major impetus for making radical changes.  I do not think companies should make major changes to their processes, but they should know what their processes are and understand how they will change their processes if needed. 

Hopefully there is no need to make drastic business changes and companies will not have to implement this safety plan.  If that is the case, the organization is better documented, prepared for further process improvement and in a position to be proactive rather than reactive to a market change. 

Thinking about recessions and the many adverse ways it can affect businesses and us personally is not a fun topic.  While we all hope that we manage to avoid a recession and enter a period of further economic growth, it is inevitable that there will be unseen items in our future.  We know there will someday be a recession or global event that must be handled as it could threaten our business operations. Instead of being reactive waiting for this to occur, I would advise it is better to document our processes now, streamline where possible and be prepared.  

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Lean On Your Supply Chain To Weather The Potential Recession by Guy Courtin