Sunday 23rd Oct 2016 - Logistics Manager

Companies rethink operating model

Some 43 per cent of global companies have permanently altered their operating model in response to the events of the past 18 months, according to a study of executives at 570 leading global companies from Ernst & Young. A further 45 per cent said there had been a temporary impact.

And 56 per cent of the executives said that their risk management processes had been permanently altered – 33 per cent temporarily. For 45 per cent the regulatory framework for business had also fundamentally changed.

Scott Halliday, UK and Ireland country managing partner at Ernst & Young said: “Not only does this research show the permanent impact of the change that has taken place in the past 12 months, it also demonstrates how rapid that change has been and how very few people saw this coming. More than three quarters of the executives we surveyed were surprised by both the severity and speed of the downturn.”

Over the past year 86 per cent of executive said they had accelerated cost reduction programs, 52 per cent had speeded up their restructuring plans and 38 per cent had pushed the button on a “significant employee reduction program”. When asked about their key drivers in the short term there was increased scrutiny on profitability (73 per cent), pricing strategy (55 per cent) and 52 per cent their relationship with customers. 38 per cent had seen more investment in risk.

In the longer term, executives were pretty evenly split between expanding into new geographies, increased use of strategic alliances, acquisitions, and speed to market and divesting non-core business.