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June 2, 2020

Will the forest products industry evolve post Covid-19?

  • 2020 will be marked as the year of change. Change sometimes occur innately to alter the strategic direction of a business. Other times, change is executed as a means to survive. As Covid-19 radically transforms the global landscape, how will the forest products industry change direction?

As compared to dynamic industries which have strategically responded to the evolving business environment over the past two decades, one would argue that the forest products industry has been transfixed.

Digital transformation within the forest products industry has been limited to business processes, data collection, data management, and several back-office functions related to technology, general business services, and human resources. The sales and marketing function remains cemented in time.

Over the years, e-commerce platforms & organizations have not effectively digitized forest products transactions. You will find Chinese plywood suppliers going door-to-door in Karachi offering samples of their products to prospective importers. Log brokers linking with Asian buyers in Dubai to negotiate a break-bulk shipment of Pinus sylvestris. Sawmill sales managers hoping on-and-off flights to visit their clients across the Middle East and the Asia Pacific.

Quality checks, negotiating contracts, and discovering new buyers are traditional functions which sales managers conducted in “face-to-face” environment. In certain emerging markets, it is common to send company employees to collect funds owed by their clients – an action considered in mature markets as traditionalistic.

However, human interactions between supply chain participants are immensely common and essential to the sales & diversification strategy of an organization. As an industry heavily reliant on globalization and human interaction, innovative companies will need to digitize their sales and marketing operations to rebound from this crisis. The question is how.

A reluctancy to travel in the short term will dominate people’s mindset. Large gathering of people will likely be avoided for this year and majority of the exhibitions and key conferences will likely be pushed back to 2021. In developed markets, virtual conferences are the new normal yet developing markets in MENA and the Subcontinent are still struggling to successfully implement a virtual sales experience.

The current risks associated with travel will greatly hamper supply chains typically dependent on a more human exchange to conclude orders. As the realities of the pandemic solidifies the “new” business landscape, the immediate future might pose a risk to the supply chain. Those seeking new export markets might have to rely on their traditional customer base to boost sales. New entrants will find significant barriers to entry which might lead to further consolidation of the supply chain. Communicating via digital platforms might prove tough in markets where cultural norms must be respected.

The solution is to create a comprehensive, digital, customer-centric experience in which the supply chain can effectively communicate. Sebastian Finger, the Sales Manager of Egger Group overlooking Africa, Middle East, and South-Asia markets, has already implemented a comprehensive digital strategy which highlights the importance of staying close to partners and clients through the use of video conferences, webinars, and apps.

Egger is a large family owned global forest products organization with 9,900 employees situated across 27 sales office. Prior to the emergence of Covid-19, the organization had successfully created the “Egger Decorative Collection App”, a tool which provides a digital experience in navigating their decorative collection and to find decors as per the client’s requirements. Experiences can be enjoyed through digital platforms as long as as they provide a value to the viewer.

Peter Drucker had famously coined the term “innovate or die” – a phrase likely to be the cornerstone of all companies trying to navigate through these challenging times. The economics of the pandemic are being felt by the global economy, yet the hardship brought by organization’s inability to innovate will cause a different type of hurt.

Author: Faizan Choudhry, BBA George Washington University


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