The Covid-19 pandemic has posed one of the toughest challenges, taking not just people’s lives but also bankrupting businesses.
Many industries across the world have had to halt economic activities in order to prevent or control infections, and though the outbreak has started to abate, the economies have not started recovering. At this period, countries are starting to cautiously lift lockdowns to prevent a potential second wave of infections.
Nevertheless, the business sector can consider this crisis as a lesson in strengthening their preparedness. One of these businesses is Minor International Pcl (MINT), a global leader in hospitality, food and lifestyle industries. It has persevered through the deep recession triggered by the pandemic, and is illustrating that diversification will help it grow stronger.
William Heinecke, chair of Minor International’s board, said the outbreak has taught the company lessons.
William Heinecke, chair of Minor International’s board
The first is that hygiene certificates will convince customers to use services during the period of lifting of lockdown measures.
For instance, the Anantara Siam Bangkok Hotel was awarded the Tourism of Authority of Thailand (TAT)’s “Amazing Thailand Safety and Health Administration: SHA” certificate as well as the Hotel Facility with High Hygiene and Safety Standards certificate from the Public Health Ministry’s Department of Health. These certificates help guarantee guests’ safety.
Other hotels under Minor International have also submitted requests for hygiene and safety certificates in order to reassure guests using Minor Hotels, which are using Ecolab and Diversy brand sanitising equipment. These brands offer high-quality cleaning tools designed specifically for the food service industry as well as for food processing, hospitality and healthcare industries.
Cleaning products used in Minor Hotels have the same level of quality as those used in hospitals, and every effort is being made to keep items touched by guests, such as keycards and pens in lobbies and hotel rooms, regularly disinfected.
Minor International is also adapting to the digital age in operations. In the post-Covid era, more and more people are leaning towards digital transactions, which are both convenient and safe. Though restaurants were stopped from providing dine-in services during the lockdown period, Minor International began providing online food-delivery services.
Minor owns more than 530 hotels in 55 countries, as well as many large restaurant brands.
Heinecke added that one of the most important lessons learned is diversifying investment. He said operating in just one particular industry will pose a lot of problems, but if businesses diversity across multiple industries and regions, they will still gain revenue and manage to survive. They will also be able to reduce risks and limit losses caused by economic instability.
Minor operates in the Asia-Pacific, Middle East, Africa, Indian Ocean, Europe and America markets.
Despite the impact of Covid-19, the food delivery business and the online lifestyle store business have grown due to changes in consumer behaviour.
However, the impact of this crisis will not be permanent. Though the tourism industry has suffered from natural disasters and political instability, it has always recovered and now that countries are carefully lifting restrictions, domestic tourism will pick up followed by regional tourism, which will benefit Minor Hotels.
Minor owns more than 530 hotels in 55 countries, as well as many large restaurant brands such as Sizzler, The Pizza Company and Burger King that serve western food, and Thai Benihana, Thai Express and Bonchon for Asian tastes. It also has popular dessert brands such as Swensen’s and Dairy Queen.
Heinecke also said that Minor International also sells lifestyle products under Anello, Bodum, Bossini, Brooks Brothers, Charles & Keith, Esprit, Etam, Joseph Joseph, OVS, Radley, Scomadi, Zwilling JA. Henckels and Minor Smart Kids brands. He said business diversification will help support the business once consumer demand returns. Minor International is ready to respond to demand everywhere regardless of the industry or region.
By Nu To Van, Sukanok Suthinan Special to the Nation
At a time when people are spending more time at home and companies are increasingly digitising their business and shifting “online”, it may not come as a surprise that governments are looking for ways to cast their tax net on these online activities.
Much like some other Southeast Asian countries, like Malaysia and Singapore, Thailand is in the process of introducing its own version of a digital services tax.
Only June 9, the Cabinet approved a draft bill to impose VAT on digital services that require foreign digital service providers, while platforms have to register for pay VAT in Thailand. In line with guidelines from the Organisation for Economic Cooperation and Development (OECD), the draft bill focuses on providing “clarity” on VAT taken for transactions between businesses and consumers.
What does it cover and what are the key requirements?
In Thailand, the digital services tax will be in the form of VAT imposed on electronic services transactions. Based on a broad definition of electronic services in the draft bill, most online activities are expected to be covered. For instance, services related to the supplying of digital content, like online gaming, music and movie streaming, e-books, online advertising services, providing online learning courses or webinars as well as online subscriptions to news website are all likely to be covered under the new digital services tax.
Companies that are caught by this new digital tax need to register for VAT (either as a service provider or electronic platform). They can do this electronically and the Revenue Department is expected to introduce a new simplified monthly VAT return to accommodate this process. Companies required to pay this digital tax are however not required to issue tax invoices to their customers and they cannot claim any input VAT from expenses incurred in Thailand.
Who will bear the impact?
Only foreign digital service providers or electronic platforms with an annual turnover exceeding Bt1.8 million are required to register for and pay VAT in Thailand. For electronic platforms like online shopping platforms and online travel agencies, the revenue threshold would apply to two sources – revenue generated by their own platform and revenue generated from foreign digital service providers who use their platform to provide services to customers (non-VAT registrants).
Upon becoming a VAT registrant, 7 per cent VAT of the revenue generated from digital services needs to be reported and remitted to the Revenue Department on a monthly basis.
Given the relatively low turnover threshold, it is likely that most digital service providers or digital platform owners will have to start paying VAT in Thailand once the new digital services tax is introduced. The big question, of course, is who will ultimately be “paying” the VAT. Given that the service providers and platforms will not be able to recover the VAT, it may well be that Thai consumers will ultimately have to pay a higher price to receive the same digital services in the future.
So, what’s next?
The draft bill will now be forwarded to the House for further consideration. Hopefully things will be fleshed out during this process, particularly on some of the practical implementation issues. For example, the current definition of the digital services is very broad, and as mentioned earlier could cover a wide range of online activities. Whether or not this was by design or unintentional, it would be helpful for companies to clearly understand the exact digital services coverage and to assess whether they are being impacted by this new tax.
It would also be interesting to see how the Thai Revenue Department is going to enforce the new digital services tax in the future. For example, how will the Revenue Department track and audit the reported revenue by overseas service providers/platforms?
Will they require local banks to start disclosing their customer’s credit card or payment information or will they start using Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) with other countries to obtain this information? And what happens in case of non-compliance? Will this lead to potential penalties or will the Revenue Department simply start blocking their IP addresses?
Many practical questions still remain, and it is hoped that before the law is implemented (expected to be by 2021), these issues will at least be considered and addressed by the government in guidelines and secondary laws. But what is clear is that Thailand has jumped on the “digital services tax” bandwagon and it won’t be long before digital service providers and platforms need to start preparing for this new tax.
In our next article, we will be looking at how other countries are implementing their digital services tax, how they deal with some of the abovementioned practical issues and how companies can start preparing for this new digital services tax in Thailand.
Nu To Van is partner, while Sukanok Suthinan is senior manager of tax and legal services at Deloitte Thailand.
By The Washington Post · Steven Zeitchik · NATIONAL, BUSINESS, WORLD, ENTERTAINMENT, SPORTS, RACE, FOOTBALL DISNEY-ANALYSIS
Disney is boldly choosing a side in the culture wars. Or is it?
On Monday, Disney announced that it had made a first-look deal – a mutual commitment to develop content – with former San Francisco 49ers quarterback Colin Kaepernick. Among the potential projects are shows with Hulu, movies with Pixar and an ESPN docuseries about the activist-athlete’s roller coaster recent years.
The announcement comes at a moment when politics, sports and entertainment are entwining in new ways, now converging at the country’s largest entertainment company. And on its face, it represents a shocking turnaround. Kaepernick’s protests, which began with kneeling during the national anthem and also included wearing socks that depicted police as pigs, created a legion of followers, a large number of detractors and a culture war that went all the way to the White House. He has been cheered, shunned and become, no matter one’s politics, a lightning rod. And Disney has long been careful in the extreme to avoid lightning rods.
As a company with a record $70 billion in 2019 revenue, the firm relies on selling the greatest amount of goods to the greatest number of people. Most of its big-screen heroes, from Tony Stark to Moana, peddle general values of innovation and determination, avoiding both an overt nationalism and a spirit of protest. Disney has long avoided political commentary on the small screen too, largely eschewing the Stephen Colbert and “Saturday Night Live” ethos’ of rivals CBS and NBC.
Yet here it stands, embracing Kaepernick across its brands.
The announcement even arrived with official Walt Disney Co. bells and whistles; the news release came with comments not just from executives at The Undefeated, the socially minded ESPN-owned website that will help oversee the partnership, but hosannas from Robert Iger, Disney’s executive chairman. “Colin’s experience gives him a unique perspective on the intersection of sports, culture and race,” he noted.
As if to underline the shift, Disney also announced that former ESPN personality Jemele Hill, who left first “SportsCenter” and then the network over clashes with management regarding her political outspokenness, would help produce the Kaepernick docuseries. It was a homecoming for a prodigal daughter to go along with the minting of a new favorite son. (A homecoming of sorts – Hill was brought in by Kaepernick, according to a person familiar with the negotiations who was not authorized to talk about them publicly, not by ESPN.)
The apparent meaning of the effort did not go unnoticed by experts. As the longtime media journalist Anthony Crupi pointed out, the deal marked “a reversal of the play nice with 345 Park Ave/Stick to Sports initiatives” that Disney and ESPN had long practiced, referring to the NFL’s New York headquarters.
The announcement also seemed to satisfy what the University of Virginia’s Carmenita Higginbotham, who teaches and studies Disney, told The Washington Post just last week was required of the company.
“What Disney has to do is figure out how to make itself matter, how to get in front of audiences in very different ways than it has in the past,” she said. “Because the previous rules . . . of just riding safely down the middle of American society” no longer work.
But the Kaepernick deal may also be less subversive than it appears. Kaepernick and his approach – which deployed a visually potent image to call attention to systemic racism and police misconduct – were in fact endorsed by Disney only after many entities had already pivoted to embrace the athlete during the past six weeks of Black Lives Matter protests. As a larger political movement has gone from marginal to mainstream – and, not insignificantly, as President Trump’s poll numbers suggest his waning ability to win this particular culture war or use it to his political advantage – it has made the former QB safe for a lot of companies, and ultimately for Disney.
The Kaepernick signing, in other words, says a lot more about the distance his message has traveled than how far Disney has come.
When he first took a seat, then a knee, in 2016 and explained his actions (“I am not going to stand up to show pride in a flag for a country that oppresses Black people and people of color”), Kaepernick prompted many other players to do the same. He also prompted a weeks-long attack by the president, who among other things said protesters were “disrespecting our country” and suggested they should be fired for kneeling. Also following was a possibly related drop in NFL ratings; Kaepernick’s blackballing by NFL owners; a backlash-filled Nike ad campaign; and many impassioned defenders who decried his treatment by NFL owners.
The league, in the aftermath of the kneeling movement he kick-started, in 2018 even rewrote its rules to require players on the field to stand for the anthem.
But Kaepernick is hardly non-grata anymore. As protests against police brutality and on behalf of the Black Lives Matter movement took worldwide root following the police killing of George Floyd, they significantly changed Kaepernick’s standing and broadened his acceptance into places he’d never previously found it. Even Roger Goodell, the NFL commissioner who oversaw the anthem policy, released a video apologizing and endorsing Black Lives Matter.
The climate made Kaepernick go from outlier to fixture – and, even more, made him a must-have symbol for companies looking to show they are on the right side of history. For a large entertainment outfit, Kaepernick now presents a prize not easily obtained: the chance to appear activist in a moment when some of the country’s biggest celebrities are crying out for action.
Disney was hardly out front in working with Kaepernick even among other entertainment giants. Netflix, Disney’s sometimes more quick-footed rival, had announced a deal to produce a show based on his life a week earlier.
Even Trump appears to have decided Kaepernick is no longer a worthy target for his purposes. While the president continues to wage a culture war – just on Monday he tweeted criticism for NASCAR’s decision to ban Confederate flags and said Bubba Wallace should apologize for the noose “hoax” – he has dramatically changed his stance on Kaepernick. “If he deserves it, he should” the president said about landing a spot on an NFL roster. It was a far cry from his comments at a rally in 2017 that, upon seeing a player knee, an NFL owner should tell a coach to “get that…off the field right now,” using an obscenity. “Out. He’s fired. He’s fired.”
But all of this mainstreaming and revisionism over Kaepernick’s brand of course doesn’t mean there aren’t plenty of shots left in the culture war. It just means they won’t be fired over him.
None of the Kaepernick or kneeling acceptance, for instance, speaks to how some of the constituencies that have softened on it will respond when he or others push the protests further, when it goes beyond a kneel to more overtly political messages about the government, about candidates, about the police. Or how Disney will react when they do. Already athletes are objecting to how the NBA, with which ESPN partners on a three-company $24 billion broadcasting deal, has managed the question of messages on jerseys when the league restarts later this month. (Philadelphia 76ers forward Mike Scott criticized the move on Monday as “a bad miss” the limiting nature of the process, in which players can choose from a handful of NBA-approved slogans but do no more.)
Nor, for that matter, does it speak to how ESPN and Disney will react when(ever) the NFL season starts and, say, Dallas Cowboys owner Jerry Jones, historically outspoken against liberal politicians and causes, chooses to end his recent silence. Or if ratings drop. Or in the event of many other developments that force a more difficult choice than signing a first-look deal with a valuable brand.
The Kaepernick signing is historic – but for the recently fomented cultural change it epitomizes, not for a broader shift it augurs. And certainly not for any long-term change it yet suggests at Disney.
Disney, of course, is not in any way required to practice activism; as a publicly traded firm, it will make decisions on the basis of shareholders, not politics. But activists and academics are also within their rights to tamp down their enthusiasm about the move.
Some commentators on Monday did just that.
“This is more than offering platitudes, they’re spending money,” Todd Boyd, a University of Southern California professor and expert on pop culture and black history, told The Post of the Kaepernick deal. “But they’re also doing something that is within their own self-interest to do. He poses no real risk to their business, other than the money they’re investing.” Boyd noted that Kaepernick’s “iconic value is especially high at the moment.”
Disney is taking the lead from other companies in accepting Kaepernick, showing that America’s most politically cautious media company is changing – but only regarding one personality, only when it’s likely to provide benefit and only after many other institutions have already paved the way. Whether other entities will still follow an activist celebrity no matter where they may go – and whether Disney will in turn continue to follow them – remains the more important and less answerable question.
By The Washington Post · David J. Lynch · NATIONAL, BUSINESS, CAREER-WORKPLACE ECON-ANALYSIS
Sales were stronger than expected when Macy’s reopened its first stores in early May, after a nearly seven-week coronavirus shutdown. But that initial surge soon fizzled, leaving the retailer’s brick-and-mortar business down more than one-third.
Some stores reopened in malls where restaurants and movie theaters remained closed, limiting foot traffic. Outlets in major cities suffered from the absence of foreign tourists. And recent coronavirus flare-ups across the South and West convinced executives they faced a grueling recovery that could take until 2022.
“The situation is really fluid. And it changes day by day,” Jeff Gennette, Macy’s chief executive, told investors this week on an earnings call.
The same could be said of the entire U.S. economy, which has defied the most pessimistic forecasts yet still faces an uncertain trek back to its former heights. With the unemployment rate at 11.1 percent, worse than at any point during the Great Recession, and output continuing to decline, the healing could go on for years.
Employers are rehiring workers faster than economists anticipated, at least as of mid-June when the latest Labor Department survey was taken. But more recent setbacks in the economic reopening, as the daily number of coronavirus cases topped 50,000 for the first time, have blackened the outlook.
“It’s going to be pretty slow going. The bottom line is this is all about public health, public health, public health,” said Narayana Kocherlakota, a former Federal Reserve Bank president. “This is absolutely a multiyear recovery.”
More than half of the country has now paused or reversed plans to reopen for business, according to Goldman Sachs. Almost four months after the first shutdowns, the health situation is getting worse, not better, in states such as Florida, Texas, Arizona and California. New national data on credit card spending, restaurant reservations and small-business hours show that the recovery from the recession that began in February may already be losing steam.
On Thursday, the Congressional Budget Office released its new forecast, calling for the economy to expand at an annual rate of 12.4 percent in the second half of the year, down from the 15.8 percent it projected in May. That represents unusually rapid growth, but it will follow a three-month period that is widely expected to be the worst in modern history.
The Atlanta Fed’s real-time model estimates that the economy shrank in the quarter that ended June 30 at a rate of 35 percent.
Still, the situation is not as bad as many economists feared. In March, as the economy plunged into the deepest recession in decades, many warned that the unemployment rate would hit 20 percent by summer.
On Thursday, in contrast, the Labor Department reported that the economy created 4.8 million jobs in June, shattering the record set in May. At the White House, President Trump took a victory lap, heralding the development as “spectacular . . . record setting . . . astonishing.”
The president boasted of the rising stock market, robust retail sales, and a revival of consumer confidence. With customary bravado, he took credit for the rebound while laying the blame elsewhere for the plummet that had preceded it.
“This is not just luck, what’s happening; this is a lot of talent,” Trump said. “All of this incredible news is the result of historic actions my administration has taken working with our partners in Congress to rescue the U.S. economy from a horrible event that was formed, took place in China, and came here.”
Indeed, Congress approved spending $3 trillion to rescue the economy while the Fed expanded its balance sheet by an additional $3 trillion to support lending to businesses, households and local governments.
Yet Democrats have charged that the president’s failure to combat the coronavirus by encouraging the use of masks and implementing a national testing program helped fuel the latest surge in cases.
The economy remains badly wounded. Nearly 19.3 million Americans are receiving unemployment benefits, almost three times the peak during the worst of the 2008-09 financial crisis and up from just 1.7 million in early March.
The situation is still so dire that the Fed for the first time in its 107-year history has created a program to buy the corporate bonds of blue-chip companies such as Apple, Walmart and AT&T to facilitate lending.
Trump’s salesmanship also risks opening a credibility gap between his rosy comments and reality. In a Fox Business interview on Wednesday, he again predicted a swift “V-shaped” recovery, an expectation that few economists outside his administration share. And he repeated his unfounded claim that the coronavirus will “just disappear” one day.
“We’re headed back in a very strong fashion with a ‘V,’ and I think we’re going to be very good with the coronavirus,” the president said. “I think that at some point that is going to sort of just disappear.”
Instead, the outlook is a start-and-stop recovery with the economy held hostage by a failure to contain the pandemic, some economists said. Adjusted for inflation, the economy will be smaller than it was at the end of 2019 until the middle of 2022, according to the CBO.
Megan Greene, an economist with Harvard University’s Kennedy School of Government, expects the unemployment rate to increase in July. Many small businesses that took advantage of a government loan program for small businesses may exhaust their borrowings next month, and enhanced unemployment insurance payments will also expire unless Congress acts.
“It’s a massive cash cliff for the economy,” she said.
Elsewhere, Apple, which had been among the first retailers to close during the initial pandemic shutdown, this week shuttered 77 stores in seven states for a second time. Credit and debit card spending, which had recovered steadily since mid-April, fell back in the week ending June 27, according to JP Morgan.
The investment bank cited findings from a panel of 30 million Chase cardholders and said the decline was “surprisingly widespread across states and demographic groups.”
Restaurant reservations also have lost ground in recent days. On July 1, bookings were down 64.7 percent from one year ago, having worsened from the 57 percent decline on June 27, according to the online dining service Open Table.
And Homebase, a provider of scheduling software, warned that small businesses were hitting a “reopening plateau.” After a rush to reopen in May, progress in cities such as Houston and Phoenix has stalled, the company said. Up to 20 percent of small businesses might not survive, it added.
“Going forward, my expectation is it will be more mixed,” said Nathan Sheets, chief economist at PGIM Fixed Income. “The biggest question is what happens with the virus. If we could get the virus out of the way, we have an economy that is itching to get back to normal.”
There is ample evidence that the pandemic retains its iron grip on the $21 trillion economy.
In Texas, United Auto Workers Local 276 last week asked General Motors to halt production at its Arlington assembly plant out of concern over the spreading virus, a request the automaker refused as unnecessary in light of company safety protocols. “Every day we are setting new records in the number of people who are testing positive in the Dallas-Fort Worth area,” the union said on its website.
In New York City, Mayor Bill de Blasio halted indefinitely plans to allow restaurants and bars to resume indoor dining.
In California, Gov. Gavin Newsom ordered mandatory business closures in 19 counties where the coronavirus is raging.
While the stock market gives off a scent of euphoria – the tech-heavy Nasdaq sits at a record high – bond investors are sending a different signal. The yield on the 10-year Treasury security sits at 0.67 percent, little different from where it traded in late March, and proof that traders anticipate anemic growth.
Continued cause for concern was evident in the 1.4 million Americans who filed for first-time unemployment benefits in the week ending June 27. That marked the 16th consecutive week that jobless claims have topped 1 million. Before March, the previous record had been 695,000 in 1982.
Companies in some of the states struggling amid the worst coronavirus outbreaks continue to let workers go, contrary to the president’s cheery forecast. In Florida, Levy Premium Foodservice, which handles concessions at sports facilities that are home to the NBA’s Miami Heat and Orlando Magic and Major League Baseball’s Tampa Bay Rays, notified the state of plans to lay off or reduce by more than 50 percent the hours worked for more than 1,400 employees.
It may be years before many Americans can count on complete recovery.
Over the past 70 years, the unemployment rate has declined from its recession peaks by 0.85 percentage points per year, according to a recent paper by Robert Hall, an economics professor at Stanford University, and Marianna Kudlyak, a research adviser at the Federal Reserve Bank of San Francisco.
The Fed expects the unemployment rate to be 9.3 percent at the end of this year. If the economy replays its previous performance, it would take nearly seven years for the economy to get back to February’s 3.5 percent jobless rate.
By The Washington Post · Rachel Siegel · BUSINESS, HEALTH, US-GLOBAL-MARKETS JOBS-ANALYSIS
WASHINGTON – The U.S. unemployment rate is expected to stay above its pre-pandemic levels through the end of 2030, according to a 10-year economic report released Thursday by the Congressional Budget Office.
The agency is predicting that the unemployment rate in the fourth quarter of 2030 will be 4.4%. The current level, according to data published Thursday by the Labor Department, is 11.1%. Before the spread of the coronavirus pandemic shut down vast swaths of the American economy, unemployment had reached 50-year lows, coming in at 3.5% in February.
The new projection shows the long-term tail impact that economists believe the coronavirus pandemic will have on the U.S. economy, which is the largest economy in the world. A severe disruption to production and hiring in March and April has had a jarring impact on the United States.
The country’s economic outlook over the coming decade has “deteriorated significantly” since the CBO published its full baseline economic projections in January, the agency said. The agency on Thursday also said that economic growth for the second half of 2020 is now expected to be slower than projections published in May, which focused on the U.S. economy this year and next.
The latest projections showed that real GDP is expected to grow at a 12.4% annual rate in the second half of 2020 and recover to pre-pandemic levels by mid-2022. The unemployment rate is expected to peak at over 14% in the third quarter of this year, the report said.
In May, the CBO estimated that real GDP would contract by 11% in the second quarter of this year, equivalent to a 38% drop at an annual rate. The May report also projected that in the second quarter, almost 26 million fewer Americans would be employed than in the fourth quarter of 2019.
At a news conference following Thursday morning’s jobs report, President Donald Trump said the economy was “coming back extremely strong.” Earlier this week, senior White House economist Larry Kudlow said that the “overwhelming” evidence pointed to a V-shaped recovery.
But many economists and lawmakers caution that the jobs data reflects a survey taken in the middle of June – before a surge in cases pushed multiple states to reimposed restrictions and scale back reopening plans. That means scores of Americans have now been kicked out of the workforce for a second time. This week also marked the 15th straight week of unemployment claims that topped 1 million.
On Wednesday, the country reported 52,789 new coronavirus cases, marking the largest single-day total since the start of the pandemic. A growing number of health officials, lawmakers and economists say controlling the virus is crucial for the economic recovery. Minutes released Thursday from the Federal Reserve’s June meeting showed that officials at the central bank are concerned that the United States could enter a much worse recession later this year if infections continue to mount.
Jun 29. 2020Roch Gauthier Senior Product Management Director, Aspen Technology
By Roch Gauthier Senior Product Management Director, Aspen Technology Special to The Nation
Before the onset of the current pandemic, companies were already increasingly interested in the idea of a self-healing supply chain.
Steve Banker of ARC Advisory Group stated in a recent Forbes article: “The term ‘self-healing supply chain’ is beginning to be used. This term reflects the idea that parameters should automatically be updated. It also includes the idea that the best plan is useless if unexpected events occur. It is important not just to create an optimum plan, but to be able to replan using a robust control tower as needed. A self-healing supply chain is impossible without a robust supply chain digital twin.”
Business continuity refers to maintaining, adjusting or rapidly resuming business functions in the event of a major disruption.
In a recent report titled “Beyond Covid-19: supply chain resilience holds key to recovery”, Baker McKenzie and Oxford Economics cited that the pandemic has resulted in an unprecedented global supply chain crisis. Forecasting global recovery as early as H1 2021 in the hardest-hit manufacturing sectors, the firm alluded to digitalisation of supply chains as strategic for businesses to achieve resilience and sustainability.
On this road to recovery, it is essential that businesses continue to stay ahead of the curve. In the recent months, I had conversed with supply chain professionals in process manufacturing industries to learn how their organisations were adapting and achieving business continuity by leveraging digital twins.
Let me share with you what I have observed and learned in different phases since the onset of the pandemic.
Phase I: Protect people and the business
Keep plant operations personnel safe
The priority at the onset of the pandemic was to keep employees safe. I learned about a North American company that rapidly incorporated social distancing into their production planning and scheduled digital twins in order to help keep their manufacturing operations personnel safe. While generating optimal manufacturing plans and schedules, digital twin technology ensures that operations personnel work in a section of the production facility with adequate physical distancing to keep people safe while simultaneously considering complex manufacturing equipment constraints related to using alternating lines/equipment on various days of the week.
Gain insights into financial and operational implications of business scenarios
The other priority was to protect the financial health of the business. Many organisations mobilised a team responsible for evaluating the financial and operational implications of numerous short- to mid-term business scenarios. I learned that an European company had been using their end-to-end supply chain planning optimisation digital twin to run and analyse a significant number of scenarios every day immediately at the onset of the pandemic. Their digital twin allowed them to easily change time period specific data assumptions related to supply and demand conditions spanning their global supply chain. Since their digital twin makes use of holistic mathematical optimisation, they were able to rapidly develop a portfolio of supply chain “game plans” on how to best respond to circumstances as the future unfolds. My big takeaway is that supply/demand scenarios analysis has rocketed in importance in the process manufacturing industries since the beginning of the pandemic.
Phase II: Adjust processes to achieve continuity as supply/demand conditions fluctuate
Keep work-from-home and on-site teams aligned constantly
Maintaining business continuity and safe reliable supply chain and manufacturing operations became much more challenging when some of the people who usually work at the manufacturing sites were directed to work from home. This included schedulers, material planners, engineers, supply chain planners, shipping coordinators, to name a few. I learned a wonderful story about an Asian production site that is using a digital twin that helps their supply chain and manufacturing operations teams stay aligned and on the same page throughout the day. The technology allows them to interact with a live web-based view of the latest published schedule, view projected inventory positions, identify problems ahead of time and help everyone maintain situational awareness about what is happening at the manufacturing facility and working towards a common goal.
Quickly adjust to keep demands, capacity, supply and operations execution in synchronisation
I learned of a company that produces some materials that have been in higher demand in past months that leverages a scheduling optimisation digital twin, which helps them to align demands, capacity, supply and operations execution by team members daily. The digital twin allows them to adjust to changing conditions and helps them improve cash flow, ensure on-time shipping performance and flex production output.
Phase III: Prepare for the recovery
Monitor demand for signs of recovery and hopefully rebound
Since the beginning of the pandemic, most companies that I have spoken to are reporting that the accuracy of their demand forecasts are considerably less accurate than before. Forecasting digital twins were never designed to handle the profound and fundamental changes that have occurred in consumer behaviour and upstream business demand patterns as a result of the pandemic. There is a good article that was published recently in the MIT Technology Review on this topic entitled “Our weird behaviour during the pandemic is messing with AI models”. In preparing for a recovery, some companies are using digital twins to help them closely monitor changes in demand trends week-over-week as part of their weekly sales and operations execution meetings.
Redesigning supply chain and manufacturing to be more resilient
The pandemic has exposed vulnerabilities in today’s global supply chains that were designed for efficiency. There is an opportunity for manufacturers to (re)design their businesses to make them more resilient. This will involve analysing and building redundancies for critical product lines and associated production and supply capabilities, including reviewing existing suppliers and locations; substitution options; as well as existing manufacturing locations and the current flexibility of manufacturing resources.
This is an area where an end-to-end supply chain optimisation digital twin can be leveraged to explore and analyse various supply chain and manufacturing (re)design alternatives to build more resilient businesses.
Strengthen your supply chain with self-healing capabilities
Digital supply chain planning and scheduling twins are often used to make customer order promises and commitments. There are significant risks to customer service levels and on-time in-full KPIs if digital twins get out of synch with reality. Self-healing supply chain capabilities ensure that supply chain digital twins remain as accurate as possible, reflecting demonstrated plant, equipment and process performance. This is achieved by automatic detection of data inputs that may no longer be valid among the tens to hundreds of thousands of manufacturing data inputs (for example, processing times, yields, set-up times, cleanout times, transition times, etc) using supply chain digital twins. Self-healing supply chain capabilities help identify these proverbial needles in the haystack with minimal time and talent input.
Self-healing supply chain capabilities can also combine both predictive and prescriptive technology. For example, low-touch machine learning is used to predict with high degrees of certainty manufacturing equipment/asset failures weeks in advance. Prescriptive mathematical optimisation methods in supply chain planning and scheduling digital twins make use of these advance equipment failure warnings to answer the question: “When should we take planned downtime (in advance of the predicted failure event) to ensure minimal disruptions, costs and impact to customer order commitments and relationships?”
Digital twins are proving to be critical tools for many manufacturers in processing industries during these uncertain times. Digital twins provide insight so organisations can adapt to this new operating environment and keep supply chain and manufacturing operations running as nimbly and efficiently as possible. Building digital capabilities now will help organisations prepare for the uncertainty that is likely to continue into 2021 and beyond.
By Tony Ng Special to The Nation As the Covid-19 outbreak spread, customers quickly adapted to social distancing measures by adopting new online methods to buy everyday groceries. Though lockdown measures in Thailand have eased and restaurants and businesses are starting to reopen, online grocery shopping behaviours are here to stay.
Now the habit has formed, consumers will continue to rely on digital-first shopping, though they will still expect the special in-store service they received when shopping in person. Here are five lessons retailers can apply to their businesses going forward.
Lesson 1: Personalised shopping experiences
The goods people buy during a pandemic may not reflect their typical buying habits. Post-pandemic, normal purchasing habits will likely resume. Grocery shopping will go from a long-term play – in which consumers buy groceries to last weeks or months – back to a routine task for in-the-moment purchases.
As purchasing habits shift back, grocers will need to deliver personalised experiences to move more shoppers past transactions and build increased loyalty.
There are three ways grocery retailers can do this.
Artificial intelligence (AI): AI learns from customer data to suggest relevant items based on past and recurring purchases. Connect AI to your customer relationship management (CRM) system to build tailored customer journeys across marketing, commerce, and service.
Customer surveys: Surveys and quizzes let customers tell you exactly what they want – and when they need it. Create email surveys and a section on your site for feedback. Include questions on lifestyle and dietary restrictions to deliver new product options.
Chatbots: Chatbot usage has increased since Covid-19. Besides helping service teams scale, bots can provide curated information for customers. Use bots to set up order subscriptions and recommend products. Bonus: Bots make service agents more efficient because they free them up to focus on higher-value cases.
Lesson 2: Increase pickup options
Consumers will still want flexibility after shelter-in-place orders lift. Continue special considerations and services, including special pickup times and delivery options.
Take curbside pickup a step further. Reserve a certain number of spaces in your parking lot for pickup. Enable customers with an app to schedule their pickups and match them with a time and zone. Let them add their phone numbers to receive text updates. Text ahead of time with a pickup reminder and special instructions. You can also add staff to assist with curbside pickup zones by maximising self-checkout lanes inside the store. Lastly, be sure to embed service so customers can connect with an associate and ask any questions.
Third-party delivery partners will continue to play an integral role. Find ways to evolve the partnership to continue to offer at-home delivery options. For example, make it easier for customers to receive items through subscription-based delivery from the store. Or explore automated vehicles for in-town deliveries.
Lesson 3: Partner with restaurants for wider reach
Restaurants were hit hard during Covid-19 and were quick to collaborate to create new revenue streams. Offer support to the industry by using your business as a platform for change. Create strategic partnerships with restaurants to make a positive impact.
To do this, consider offering ready-made or heat-and-serve restaurant meals. Then cross-promote to both restaurant and grocery customers for maximum reach. If there’s a bundled meal for Taco Tuesday, customers could click one button and add the ingredients to their cart. This expedites the service and creates a seamless experience.
Another approach is to co-create digital content such as recipes, how-to’s, and blogs to increase consumer engagement between purchases. For example, a restaurant that features recipe content on its website can link to online grocery ordering.
Lesson 4: Empower associates to reduce contact risks
During the pandemic, store associates, warehouse workers, and delivery drivers became frontline heroes. Consumers trust and respect companies that recognise and fairly compensate these employees. According to a recent survey, after discounts, safety of employees was the top influencer for shopper purchases and loyalty.
When countries reopen, frontline employees will be tasked with even more safety measures. Empower associates to handle customer questions while reducing contact and risk. For smaller grocers, this may mean scheduling appointments for at-risk in-store shoppers. For larger grocers, formalising training on proper safety and social distancing protocol is key for one-to-one interactions.
Many grocers are implementing ways to reduce employee contact with customers such as encouraging shoppers to pay by card and use self-checkout. Safety screens and increased sanitizing can also protect workers.
Lesson 5: Change how you track inventory
Long delivery times and order substitutions marred the Covid-19 shopping experience. Post-crisis, consumers will have less patience for delays and inconsistencies.
To get ahead of expectations, track inventory the day of the order, not the day of delivery. Remove ordered items from the inventory system and keep them in the back of the store or in a dedicated section of your warehouse. If a customer tried to order an item but it was out-of-stock, notify them if it becomes available before their delivery time, so they can add it.
Evaluate order management capabilities as well. Ingest orders from online and route them to the correct store locations.
Prepare for new shopping habits, future disruptions:
While the future is uncertain, digital commerce will be increasingly important for both large grocers and small shops. Small grocers may actually have an agility advantage without disparate, legacy systems.
Grocery retailers will begin to focus on transformational projects to prepare for future disruptions. Such projects don’t have to take months or even years. For example, the Salesforce Commerce Cloud Quick Start for Grocery and Food Service is a tailored, out-of-the-box solution that has everything you need to offer buy online, pickup and curbside experiences.
Tony Ng is Asean region vice president for Salesforce
Jun 27. 2020David Oxford, Country Director, Nokia Thailand
By David Oxford Special to The Nation The Covid-19 pandemic is the biggest health emergency the world has faced in generations. The unprecedented magnitude of this crisis means everyone is making a concerted effort to improve safety while trying to keep social and economic activities running – from governments and businesses to communities and individuals.
As Thailand is gradually easing movement and business restrictions, the question now is: where does the nation go from here? Talk of a ‘new normal’ is commonplace now, but how exactly will Thailand transition towards it, and how can the nation harness new technologies such as 5G to create a smarter and safer society?
Why Thailand’s technological ambitions are not derailed
Before the pandemic, countries around the world were moving full steam ahead with digital transformation to bring societies to the future and unlock new economic possibilities.
From the outset, it may seem that the Covid-19 outbreak dampened Thailand’s digitalisation ambitions, but the pandemic is, instead, accelerating them. This includes the creation of mobile apps that can identify Covid-19 hotspots and allow people to self-assess their health, in addition to the development of chatbots that the public can communicate with to find out information on the coronavirus and steps to prevent its spread.
These efforts are solidifying the robustness of Thailand’s national healthcare system, which is ranked sixth in the 2019 Global Health Security Index and has been vital to the country’s readiness to weather the pandemic.
Thailand is already working towards building a smarter world. Yet, the challenge now – as the country gears up for its ‘new normal’ – is jumpstarting digital transformation across other key sectors, especially enterprises, although that may require more radical changes.
Adapting for efficiency
Going the radical route is often precipitated by critical periods such as the current pandemic. We have seen drastic changes by global enterprises to support relief efforts, such as scent manufacturers reworking operations to make sanitisers and luxury automakers retooling production lines to create respirators. These may be novel, unprecedented circumstances borne by the Covid-19 spread, but it highlights how important it is for manufacturing and supply chain actors to adapt their resources quickly to solve pressing societal problems.
We need to double down on what these enterprises are already doing, yet at speeds which can help improve their adaptability and supplying solutions to society more quickly. This requires communication service providers (CSPs) – and the enterprises they work with – to harness the move to 5G.
This is – as 5G can give connected enterprises the flexibility and adaptability that provides the gift of time – a valuable commodity under normal circumstances, but an extremely vital one in times like now. With 5G, the digitalisation of industries will reduce the time taken to design and build solutions.
A ‘connected’ enterprise gives it flexibility to quickly retool and change systems on demand. That ‘on-demand change’ can mean leveraging automation and remote operations to rapidly increase output, improve employee safety, and ensure the business continuity that is crucial to the production and distribution of essential products and services.
Network slicing – the essential ingredient to 5G transformation
‘Time to market’ is just as important as ‘time to manufacture’, and the key to 5G enabling rapid deployment of solutions is network slicing. Slicing is not a new concept. Virtual network capabilities have been part of packet networking for decades. However, 5G deployments will extend this virtualisation to an end-to-end and top-to-bottom functional scope, and then embed slicing as a core function of the network. The benefits include the ability to differentiate broad classes of services that require certain characteristics or resource parameters with performance characteristics that fit the needs of new segments – something that conventional one-size-fits-all networks cannot achieve.
With network slicing, 5G can support diverse and extreme requirements for latency, throughput, capacity, and availability. It will enable services that were impractical with previous wireless technologies.
For instance, 5G networks will connect ‘factories of the future’ by creating fully automated and flexible production systems – something that Thailand’s automotive manufacturing sector can leverage to improve its competitive regional position. In healthcare, hospitals can arrange greater telemedicine distribution and even arrange robotic surgeries whereas city governments can use 5G to transform urban transport management via real-time traffic management.
All of this will be possible with 5G – with network slicing support – as it helps aggregate vast amounts of data from multiple, dispersed sources for better insight into operational status. It also allows for new levels of supply chain visibility and transparency, an attribute that could prove highly valuable in pandemic tracing.
Coming out better, faster, and stronger
Fortunately, CSPs in Thailand are taking advantage of 5G’s potential to support efforts to flatten the curve and provide relief to those impacted by lockdown measures.
Such efforts should be lauded, and we are doing our own part to help CSPs and their enterprise customers stay prepared amid the pandemic. Through our Covid-19 network traffic dashboard, we are analysing global network traffic to help them anticipate capacity requirements and optimise resources.
Right now, we must all remain steadfast in enduring Covid-19, but I am confident that we will come out stronger. When we do, 5G is there to help us create a world that is smarter, safer, and – most importantly – prepared to weather this sort of challenge more effectively in the future.
CIMB Thai Plc will adjust its loan expansion target due to the Covid-19 situation that has had a significant impact on Thai economy, the bank’s president and chief executive officer Adisorn Sermchaiwong said.
“We had set this year’s loan growth target at 12 per cent over last year, but due to the current situation the bank might see no expansion in loans at all,” he said.
“Our mission for this year therefore has to shift from increasing the amount of loans granted to maintaining the quality of loans and focusing on granting loans to target groups that have higher potential,” he said.
“CIMBT also estimates that non-performing loans [NPLs] this year will be at the same level as the previous year despite the Covid-19 outbreak, thanks to the supportive policies of the Bank of Thailand,” added Adisorn. “We aim to maintain NPLs at 4 per cent until the end of 2020 and are planning to sell NPLs of around Bt1 billion to Bt2 billion to achieve the goal.”
Adisorn added that in the past five months the bank has seen over 80 per cent increase in banking transactions on digital platform. “This year we have added more services on digital platform including mobile banking, mutual fund digital buying and digital lending in response to changing customers behaviour in the new normal era,” he said.
“The bank estimates that until the year-end the bank’s transactions via digital platform could rise to 90 per cent of overall transactions.”
“As for the investment budget for 2020, we still maintain the original target of Bt500 million to Bt600 million, with main focus on IT infrastructure,” he added. “Although in the past few months the bank did not invest much in IT due to lockdown measures, towards the end of the year we may invest in other aspects to prepare for the post Covid-19 era.”
CIMBT’s shareholder meeting on Friday (June 26) approved the payment of 2019 interim dividends to shareholders at Bt0.005 per share, amounting to Bt174.11 million.
By Dennis Khoo Special to The Nation When the Covid-19 pandemic forced you to move your office to your home and to shift online, did it feel like a disruption or merely an inconvenience?
I would argue that for many of us, using digital services is not unfamiliar. Covid-19 has simply increased our dependence on and accelerated the frequency with which we use digital services.
This continual behavioural shift towards digital is not new, especially in the banking industry. Doomsayers for incumbent banks have always been around. These voices are even louder now with the proliferation of financial technology firms (Fintechs) and especially after the global financial crisis in 2009.
Fintechs are often touted as the disrupter of incumbent banks, which are said to be too big and too weighed down by legacy to be innovative. “Lite” financial outlets, such as neo-banks or digital banks, are said to be displacing their incumbent counterparts. If you are a traditional bank, your days are numbered.
United Overseas Bank, where I work and head our digital bank business, is seen to be such an incumbent bank – big, traditional and with legacy systems.
And yet in the past year alone we have been recognised by the global banking industry for our digital transformation initiatives including the launch of TMRW (pronounced “tomorrow”), the Asean region’s first digital bank for the digital generation.
Designed and built in a little over a year, TMRW was launched in Thailand in March 2019 and expanded into Indonesia earlier this year.
TMRW runs on a new business model that focuses on customer engagement as our primary performance indicator instead of revenue or profit. Those are important – we run a business after all – but our model hypothesises that if we deepen engagement, the bottom-line benefits will follow.
But what’s new here? Many traditional banks have launched digital banks. Many of these banks have also shuttered their digital bank operations or have admitted that their digital banks have not performed to expectations.
On the contrary, TMRW has shown in just one year of operations that our new business model works and is bearing fruit. In Thailand, a market with one of the highest digital banking standards in the Asean region, TMRW has the third highest net promoter score (NPS) among all banks.
NPS (which tracks how likely customers will recommend a brand to their friends and family on a scale of one to 10) is one of the key indicators of customer satisfaction, loyalty, and more importantly engagement and advocacy.
It is a very stringent measure as NPS only recognises customer advocacy if customers indicate nine or 10 on the scale. Customers who indicate a six or below are considered detractors, which affects the net promoter score. Three in four of our customers have become our advocates, referring TMRW to their circle of influence.
There is a need to challenge the status quo even if you’re a successful and growing traditional bank today. Our customers are increasingly going online and the next generation of customers who are digital natives will likely choose digital-first or digital only channels.
Every bank is different and has its own sets of challenges and business objectives. I have listed three principles which we took that have helped UOB to meet its strategic digital objectives.
1. Make the case for change:
Be a catalyst for mindset change within the company.
Any new initiatives require investment, time and more importantly the buy-in of all your stakeholders, from the board to your senior management team, for long-term success. My team and I were able to count on the support of the senior management team who saw TMRW as a long-term strategic investment and trusted us with the time needed to develop a business model and to build a full-fledged digital bank from the ground up.
2. Don’t be afraid of a blank slate:
We built TMRW for regional scale within just 14 months. We were able to do so because we took the time we needed to develop a robust business model in which we were confident and which offered us a clear blueprint on which we could build our digital bank quickly. This is easier said than done as there is always a pressure and a temptation to go to market as soon as possible.
We studied leading global and local banks and talked to experts around the world even as we workshopped and developed our unique digital bank model that could be scaled easily across diverse markets.
After much research, design thinking and testing, we concluded that data-driven insights, rapid learning and feedback loops are the new currency for success in tomorrow’s retail banking landscape. The bank of tomorrow needs to be customer- and engagement-focused. Simplicity is key, which means a digital bank must be targeted in what it offers and for whom it serves.
This also means it cannot stand alone to serve a universal set of customers across different life stages, but should coexist with existing traditional banks offering digital banking as part of their omni-channel strategy. Digital banks and digital banking should serve different customer segments and are likely to have different growth trajectories.
3. Integrate your customers into your business model:
Progressive companies today are already focusing on ensuring a customer-centric experience. We believe that the customer experience is not just an element of the future of service. Instead, a service-driven business such as banking should rethink its business model where customer-centricity is the goal rather than a by-product.
That is what UOB did for TMRW. We invented a new business model we call ATGIE to power our new digital bank. Designed to start small, to lower the cost to serve and to scale quickly in the medium term, ATGIE stands for Acquire, Transact, Generate data, harness Insights, and to use these insights to Engage the customer. Through a flywheel effect in which customer engagement is deepened with every interaction, TMRW is able to grow the number of quality customers organically through advocates and to keep the cost of acquisition down.
The current pandemic has accelerated a consumer shift towards digital bank and digital banking services at an unprecedented pace, and customer expectations for a superior digital experience will continue to grow in tandem. It’s never too early to start thinking about how you can serve tomorrow’s customers, but it can be too late.
Dennis Khoo is head of TMRW Digital Group, United Overseas Bank.