MANUFACTURING & DISTRIBUTION

Manufacturing & Distribution - Protiviti

MANUFACTURING & DISTRIBUTION

 

To supplement the 10 questions provided in Issue 128 of Board Perspectives: Risk Oversight, the following additional questions are offered to directors serving on boards of manufacturing and distribution companies:

  1. As we go forward in the reopening, how are we aligning production with market demand?
    • For production facilities at which we have either reduced or suspended operations, what are we doing to create a safe environment in which as many people as possible can return to work safely?
    • Given the uncertainty arising from the impact of the pandemic on the global economy, how reliable are our demand forecasts in sizing the market opportunity that really exists going forward? What demand is expected given different recovery scenarios, such as a “√”- or “V”-shaped rebound, or a slower “U”- or “L”-shaped recovery, or even a so-called “W” recovery?
    • Is our sales team in touch with our customers to understand their assessment of their end markets and their needs? What insights are they and the key indicators for their respective markets giving us?
    • Given our established safety protocols, what levels of production (or volume) can we realistically achieve, and how quickly can we scale up production to the maximum levels possible to meet whatever demand the market offers?
  2. If we shifted production to deploy excess capacity and/or existing materials to respond to urgent market needs during the pandemic (e.g., ventilators, protective shields and other PPE), what lessons did we learn regarding our ability to react, innovate and pivot quickly that might enable a more nimble product portfolio or production shift going forward?

     
  3. With respect to any recent supply chain disruptions:
    • Have we reconsidered our just-in-time (JIT) inventory management strategies going forward?
    • Have we considered decoupling the supply chain with either a wider base of suppliers or potential vertical integrations of suppliers?
    • Are we prepared to adjust our supply chain in response to legislative or regulatory actions requiring sourcing from regional or domestic suppliers?
  4. To maximize production while simultaneously preserving the health and safety of our employees, are we leveraging remote diagnostic, management and collaboration tools to provide a virtual shift to support reduced or staggered onsite shifts?

     
  5. Are we reevaluating onshoring versus offshoring of manufacturing operations?

     
  6. Should we accelerate our automation, robotics and digitalization initiatives and further leverage data analytics, computing power and connective devices to achieve new or enhanced ways of operating our business that will make us more efficient and competitive in the Industry 4.0 era?

     
  7. How are evolving market expectations affecting our strategy regarding environmental, social and governance (ESG) matters (e.g., use of renewable energy, adoption of solutions to reduce emissions, and transitioning production to more climate-friendly products)? Are we prepared to make the necessary adjustments to our strategy going forward?

     
  8. Have we evaluated our cash flow from operations and financing needs in view of alternative recovery scenarios? Based on our assessment, do we face challenges with regard to meeting debt covenants, for which waivers might be needed?

     
  9. How flexible is our operating model in the event of a COVID-19 resurgence affecting one or more of our facilities, major customers, key suppliers, and logistics around the flow of material, information and services? What have we learned about our operations as well as about our customers, suppliers and logistical support network that would help us navigate another shutdown in specific areas?

 

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