Revising The GEP Outlook Report with John Piatek

Thank you Paul. My name is John Piatek, I’m a career strategy and management consultant. I've been helping the c suites of leading firms for over 15 years. I'm a vice president of consulting and a co leader of PS consumer goods and retail industries team. I'm also the chairman of GS Thought Leadership Council which is a small group of global leaders who are responsible for bringing our very best thought capital to a wider group of industry participants including in forums such as this podcast.

I wish I could say GEP predicted everything to come in 2020 at the start of year. The reality is that only a few months in 2020 we collectively realize the agenda for most business leaders was changing between devastating fires in Australia a shocking oil price war and the heartbreaking cover 19 pandemic 2020 has been a challenging year candidly 2020 will be a challenging and trying year for businesses families and individuals. It will also be a more uncertain one. GEP is ready to help and to be bold and to showcase a new outlook report for the balance of the year.

Well GEP works for some of the largest and most well-known companies around the globe. Our typical clients are Fortune 500 members or similar types of firms and we have three major service offerings including consulting technology and managed services. We are advisors to the C suite and are in authority on all things procurement and supply chain. Our teams gather the insights from working with these leading firms around the world. We bring these ideas together and combine them with our own proprietary market intelligence and research from this work. We were able to distill and share the top priorities for the year and give a perspective and briefing on them for our audience.

Absolutely. There is a core group of about 50 people that prepare this outlook report every year in this group is a combination of our consultant practitioners deployed globally helping firms across industries gathering you know gathering the types of insights and best practices that we can share for all firms. We also have a group of market intelligence specialists who are analyzing the macro trends and GEP trends and oil price trends and drawing meaningful insights from this work. And of course this wouldn't be possible without our marketing team who helps us synthesize this information in sort of a consumable format that we can share in both the report and in these sessions such as these podcasts.

Oh not at all Paul. In fact there are certainly some priorities from our initial report that are absolutely relevant perhaps arguably more so in this sort of covered 19 environment in Post covered 19 environments. For instance, if we take the notion of third party risk management GEP as arguing that third party risk management is now a board level issue it's going to have the highest level of visibility in one of the top priorities for organizations this year and beyond. Companies are deploying risk monitoring programs focusing on supply chain resilience. They're going to look at immediate business critical needs for organizations. They're going to not only look for the short term shocks and the stoppages such as when there are supply chains travel delays but also looking at how to bring the risk management ecosystem of a firm into better management. This includes a look at your alliance partners right. Because as we all know companies don't exist in isolation. There's a whole community of businesses that are linked with them. Of course the most obvious being sort of supplier prioritization. I'd like to pause and say that last part over within this ecosystem suppliers play an important role. Supplier prioritization models need to be reconfigured to build more resilience and mitigate systemic risks. Data security was a hot topic going into 2020 and we expect this can continue as a priority for third party risk management. And finally we are now seeing much more regulatory bodies sort of step up the enforcement of third party risk management across the globe. Europe for instance had had some recent updates in third in data security and data management that now that effort put into place and we expect the rest of the world to follow suit in 2020.

While 2020 will certainly be remembered as the year Business Resilience took on a new meaning. The conventional view of business resiliency has changed this year. We are now shifting from sort of a I'd like to be I must take a posture bones restart this one the year 2020 will certainly be remembered as the year that Business Resilience took upon a new meaning. The focus is going to come back on supply continuity global supply chain risks are becoming more apparent now than ever. We've relied too much on low cost countries sourcing and had too little controls to have alternate systems or allowances when there are stoppages too infrequently we talked a lot you know a big game around supply chain agility but we really hadn't set that up we really hadn't made the investments to make our supply chains agile resilient and we didn't have the cash to maintain. Too many firms had neglected sort of liquidity management and when the crisis hit found themselves with only a few weeks of cash on hand to manage this infirmity this new period in this new child Thomas productivity was significantly hit. When the COVID19 crisis hit firms, people weren't able to come to the office. Firms weren't able to move their products to the right places. Supply chain for up ended. This required investment right away to get things back to normal. Looking back at 2020 leaders are going to want to make the investments this year to upgrade the resiliency and to upgrade how other people think of their resiliency.

From a technology standpoint 2020 will certainly be the end of ambitious five year digital transformation programs. However, this does not mean by any means that digital technology is dead. In fact, it's probably more important than ever. In fact our own research suggests that over 80 percent of our clients are rolling out in some phase or some capacity digital projects and we think this is actually going to increase significantly throughout the rest of the year. While of course everyone has been talking about big data and some of the other technology buzzwords over the recent years few firms have arguably got the right type of scale impact. They were looking for. However, with the economic landscape shifting and shifting fairly quickly businesses are going to have to look for automation to create scale advantage and lower their costs in a structural way. Smart workflows will bring automation opportunities and create downstream opportunities for both procurement and supply chain. The ability to introduce new technology and upgrade once digital capabilities is going to mean you have a foundational layer to of course manage your business more efficiently and effectively but also position yourself to some of the more future looking and near-term though capabilities that are powered by artificial intelligence machine learning and other factors. That's also going to give a new life to collaborate a collaborative innovation models where suppliers and customers and businesses can come together and collaborate on a new activity in a way that wasn't possible before. So, in summary GEP expects that digital investment is actually going to pick up. If you think of all the the types of investments that firms can be making in the second half of the year all the moneys that are put towards digital capabilities are likely to pay off dividends both in the short term and also over the long haul.

While the COVID 19 pandemic will prompt many organizations to re-evaluate their cost base reestablish budgets and proactively identify new areas for optimization. This means the timing is right to take source to pay an old familiar idea into the new age and we believe this is called budget to pay. We believe that connecting the financial process with the procurement and spending. Sorry. Start over. We believe that connecting the financial planning process into the source to pay process will give businesses even greater benefits. They have then available today. This will allow the streamlining of allocation and controls with the full end to end visibility of how money is being spent and how budget is made available for those expenditures. Today firms typically go through an annual budget process. They then review it with sort of a quarterly or monthly variance reports in the key takeaway. The key impact of all this is very backwards looking. We can't stop spending real time. We can shut down a business but we can't shut down the business. Businesses expenditure with the same pace. If we had the ability to do this in real time we wouldn't be able to monitor our spending and ensure that every investment is the right one budget to pay. Gives us that it allows us to monitor our spending in real time and give the executives and finance procurement in the business the confidence that the money they are spending is the right value.

This is a continuous process for GEP preparing this type of thought capital and sharing it with the business community is something we're very passionate about. We are regularly immersing ourselves in these issues and providing perspectives and solutions for our clients. So maybe one area to highlight Paul is are covered 19 resource center on the GEP website on this dedicated section of our Web site. We've compiled all of our latest thinking of the COVID 19 crisis. The implications for different industries suggested tactics and approaches to solve some of the urgent business problems that are being experienced by our firms to solve all the urgent business problems that are being experienced by our clients. This is just an example of the type of thought and capital that GEP prepares on a regular basis. You can find all of it available on our Web site

So, Paul resetting the cost base for the Post covered 19 world will be an important topic for nearly every business this year world economies are expected to shrink possibly go into recession or depression territory and businesses will struggle to maintain their top line revenue growth as an immediate priority. Many firms this year are working towards improving working capital. Changing payment terms deferring any non-essential expenditure such as capital projects. They're going to look for opportunities to take advantage of some of the shocking price reductions in commodities such as oil and get some of that benefit back to their bottom line. Really what we expect most firms to do however is to take a look at their cost base more broadly and think How can this be reset. How can I not just operate in the new normal as a business but set my cost base for the new normal. This requires going back to your supply partners maybe doing some further rationalization maybe opening up some long-held contracts and looking for further improvements. Or maybe just simply using this as an impetus to take action of some ideas that perhaps connecting dust on your desk and now is the time to sort of put those into practice and reap that value for shareholders. Certainly, this is the year where most companies will relook at that cost line and think am my doing everything I can to bring that in line to position my business for success in the future absolutely.

Paul thank you very much. We look forward to continuing these conversations throughout the year.