One of Accenture’s top European analysts has urged businesses to limit the impact of the war in Ukraine on supply chains by focusing on operations that offset the effect of sanctions, and also by minimising the affect of the conflict on people and talent.
“We recommend two actions,” says Eloi Decottignies, Accenture’s European Lead on Operations. “First, identify those operations that will drive business continuity, in order to minimise the impact of sanctions, but most importantly, the impact on people and talent.”
Speaking in an Accenture podcast, Decottignies added that It is also important to “reassess and restructure complex and business-critical services that are handled by global operations”. He added: “Also consider cost transformation strategies and future-ready operations to drive medium- to long-term transformation.
Be future ready, Accenture urges firms on Ukraine
“Companies must devise a response that is future-ready. They need to de-risk their operations, to continue to grow profitably, keeping in mind overall customer experience and cost structures, in order to remain competitive.”
Of Accenture’s stand on the conflict, Decottignies says: “We have taken action to support the Ukrainian people, and we have also taken action to support our clients. We have a dedicated team of researchers, economists, strategists, data scientists and many more who are monitoring and recommending how we can help our clients.
“The Russian Federation’s invasion of Ukraine presents a serious threat to businesses and economies around the world, disrupting global supply chains, causing oil price shocks, inflation and potentially slowing global growth.
“Plus, the complexity of the sanctions imposed on Russia by global regulators present additional challenges for business leaders. Many firms’ continuity plans are being tested, and critical operations have been challenged.
Operations 'seriously hit' across supply and procurement
“Business operations - how organisations transform their operating models to find new value and growth - are being severely disrupted in finance, supply chain, procurement and compliance.”
Decottignies added that complex and business-critical services handled by global operations “must be reassessed and restructured to respond to new uncertainties”. He continued: “Rising inflation, higher input and freight cost for key commodities will test growth and profitability.
He also stressed that workforce pressures in regions near Ukraine and other Eastern Europe markets are another knock-on impact of the conflict.
He says: “Workforces are facing historic shortages, and current events may drive higher attrition or increased people shortages. The talent shortage and increasing cost of operations could lead to changes in operating models for many global companies that are dealing with business continuity and inflationary pressures.”
Food, energy supply disruption 'a serious concern' - Accenture
Supply disruption is causing further serious cause for concern, he noted, especially in food and energy, thanks to the key role Russia and Ukraine play in those industries.
He added: “However, the region’s role in supplying smaller, but critical, products to industries like high-tech and automotive will further disrupt supply chains that still have not recovered from the impact of COVID-19.
“Any reduction or delay in supply could quickly cause further price increases. Rapid inflation in the price of oil and natural gas will create cost pressures for virtually every industry, in addition to recent wage increases.
“With the increasing cost of goods sold, companies will want to review selling, general and administrative levers to optimise their cost structures.
“There will be further pressure on companies to operate efficiently to remain competitive. To minimise the impact of these disruptions and remain resilient, companies must make rapid and informed decisions to drive continuity in their operations and pivot from reactionary ways to driving response and recovery.”