Businesses around the world are doubling as laboratories in a great post-pandemic experiment to define what the future of work will look like.

Two-thirds of companies are considering physical redesigns that facilitate hybrid work, in which employees split time working in the office and at home, Microsoft says. Google is dedicating roughly 10 percent of its work space, totalling millions of square feet, to experiments in hybrid design that include modular pods, inflatable privacy walls, and paneled spaces in which the faces of videoconferencing employees are prominently displayed alongside in-person meeting attendees.

Old ideas are being overturned for approaches that would have seemed radical two years ago. Personal desks may be a thing of the past: JPMorgan Chase CEO Jamie Dimon speculated that the bank may need only 60 desks for every 100 employees. Open floor plans, once thought to facilitate collaboration, have been shown to decrease face-to-face interaction—and increase the spread of germs. Desk layouts or corporate cultures that stress presenteeism—showing up and being visible to a boss or manager, even when sick—could damage a company’s ability to keep its workforce intact.

The outcome of this ferment isn’t yet clear, but as employees return to office spaces, companies working with indoor location intelligence are already edging ahead in a global race for top talent and workplace safety.

Indoor Location Intelligence Illuminates Pathways to the Future of Work

Before rearranging workspaces and practices, some business leaders are using a form of smart building technology to gather data and study patterns of engagement.

For example, COOs, HR executives, and facilities managers can learn from a phenomenon known to urban planners as “desire paths.” It’s common to see such walkways pounded into the ground on university greens by students who ignore sidewalks, proving some plans that look good in a blueprint don’t match the needs of real life.

In a business setting, management can commit the same error by instituting post-pandemic measures that send the best talent fleeing to employers who offer more innovative workplace options. Indoor location intelligence produced by a geographic information system (GIS) can help identify the desire paths leading to the future of work. A tech-enabled view of indoor spaces reveals how teams operate spatially and what types of spaces employees gravitate to. It’s a relatively new application of GIS technology, which for decades has guided the planning of global supply chains, sustainability, and national retail networks. As COVID-19 disrupts indoor spaces, GIS is increasingly being adopted to unlock insights in smart building data.

One design and engineering firm with headquarters in London and nearly 100 global offices has been using GIS to plot a safe, organized return to the office and visualize the new ways in which workplaces might operate. Employees can access the indoor maps to book a desk, locate colleagues, and orient themselves in offices. Administrators use the maps to optimize cleaning schedules, ensure that safety protocols and regulations are met, and monitor the flow of people through spaces.

The data and trends surfaced by this type of system support C-suite decision-making in an uncertain time, helping business leaders anticipate how their office footprint might need to change and how to craft work from home policies that cater to the needs and abilities of each department.

By April 2021, the design firm’s indoor location intelligence program had racked up 20,000 internal bookings with 1,500 staffers actively using it.

“There is extra information that we’re now using to [analyse] how are people using these spaces, and actually, do we need to change how we’re using our spaces? That’s going to be a big thing,” says one of the company’s digital leads and GIS experts.

There are a lot of things, particularly if we had new [hires], which made people a bit apprehensive about going to the office. So this just allowed people to understand: What does that office look like? How am I going to plan my route?

Digital lead

Self-Testing Postpandemic Office Solutions

Known for its nonhierarchical structure and free-thinking approach to problem-solving, the firm had begun experimenting with a desk-booking system in January 2020 when a renovation at the Wales office scattered employees around the building. Since people weren’t at their typical desks, colleagues had to hunt around floors to find each other. A rudimentary desk-booking or hoteling system to help workers find each other became a prototype for the company’s indoor location intelligence program.

When COVID hit in full force, the firm, which often advises clients on smart building applications, saw an opportunity to meet the moment through technology. They would use the spatial planning and data analysis tools of GIS on their own offices before advising clients of the benefits. “Coming from a software development background, there’s a phrase I like to use,” says one of the company’s product leadership directors, “we eat our own dog food.”

The digital lead and his team began scaling up the indoor concept during the lockdown period to prepare for a return to the office in spring and summer 2020. As employees began trickling back into buildings, company executives focused on safety, cleanliness, and calming the nerves of an anxious workforce.

Even before stepping foot back into the office, new and returning workers could look at smart maps to familiarize themselves with the updated space layout and identify where bathrooms, hand wipes, and sanitizer stations were located. At an office where many people bike to work, it was even possible to book time slots for on-premises showers.

Using spatial simulation, the program designers could forecast the flow of people through hallways and offices and see how that might create crunch points or overcrowding. These insights were fed into GIS-based apps that gave employees turn-by-turn directions to navigate the office and avoid congestion. The technology also helped administrators understand how to situate desks to comply with social distancing measures.

What does our office of the future look like? How much of our space should be collaboration spaces? Using a dataset like [the one] we're capturing gives us a huge amount of evidence to understand and scenario plan.

Digital lead

What a Spreadsheet Won’t Show

When the facilities manager at the London office heard of the project, she immediately asked to enroll in the development process. The office she runs is massive, covering 20,000 square feet per floor across five floors, as well as basement and ground levels. Prior to implementing the GIS indoor technology in November 2020, she and her team had been using a spreadsheet to track who was coming into the office and which desks they were using. At first, it was 200 employees, then 300, and before long the number was creeping toward 400. “There was no way we could do that with a spreadsheet,” she says.

The GIS indoor-mapping program integrated with the London office’s hoteling system. It empowered employees to locate their own seats and made it easy for them to find colleagues by glancing at a smart map or searching by name. The facilities manager knew the accurate number and location of employees each day, which helped her locate enough fire marshals and first-aid responders on each floor.

Adding to workplace safety, the indoor program’s ability to remember where employees sat throughout the day enabled a track-and-trace capability. If a COVID outbreak were to occur, the company could warn any employees who might have been exposed.

The hoteling system and indoor location intelligence also paved the way for solving broader operational issues occasioned by the office’s size and complexity. The facilities manager linked the hoteling platform to an online learning course that educated employees on how to navigate the building safely; they could only book a desk once they had completed the course. The system also enforced a rule that a new floor would only open for booking when the floor below had reached 75 percent capacity. This encouraged the efficient use of cleaning and energy resources.

Hybrid Era Workplace Design

While indoor location intelligence brings efficiency to daily office operations, it also unveils insights of a higher order. The design firm’s HR leaders found data in GIS that helped shape the hybrid work paradigm. For example, Thursday was the most popular day to be in the office, and junior workers booked desks more often than senior employees, most likely because they feared remote work would hurt their chances to grow. These findings could inform C-suite decisions about which days to make mandatory for in-office work, if any. (Some companies have begun insisting that executives work remotely a few days a week, along with the rest of the staff, to avoid in-office employees gaining an unfair advantage over remote workers.)

As a multidisciplinary company, the design firm had a vested interest in ensuring that different teams interacted. The indoor location intelligence program made it possible to book “neighbourhoods” of desks in various configurations. Instead of marketing always sitting next to sales, they might rub shoulders with members of the IT team one week, or executive leadership the next. These reconfigurations could spark the kinds of ideas and innovations that the office of the future will be expected to produce.

Spatial usage patterns in the office, supplemented with data like employee surveys, could inform decisions unique to the hybrid era. Based on that data, a COO might choose to shutter a sprawling urban headquarters in favour of smaller, cheaper satellite locations in the suburbs. On a more granular level, spatial insights could push leaders to invest in cutting-edge solutions like virtual reality or augmented reality to unite a geographically fragmented staff.

We want to know, how well are the ‘market square’ areas used? Have we got the right furniture in there? Are we supporting the business in the correct way?

Facilities manager

The Hidden Geography of Office Life

Unwritten spatial rules quietly shape much of office life: an alcove well suited to sharing gossip, an elevator where the CEO might be caught on the way to lunch, a staircase that makes it easy to slip away for an early exit. Indoor location intelligence helps uncover trends in office geography and turn them into better workplace design. If, for example, no one books desks in a certain section of a floor, managers might consider whether there’s an issue with lighting or temperature control in the area. If groups of employees tend to work in the office on certain days, managers and HR executives can find better configurations for collaboration.

These are the kinds of workplace challenges business leaders will need to address, and indoor location intelligence can guide decisions on the future of work. “I think facilities management is going to become more of a crystal ball,” predicts the engineering firm’s London office manager. “You’ll know what it is that people want before they know that they want it, because you’ve got the data and because you’re seeing the trends and patterns.”

This article originally appeared in the global edition of WhereNext.

In a holiday travel season crimped by COVID-19’s spread, a group of business experts and travel industry veterans predicts that business air travel could remain down by more than a third even when the rest of the economy rebounds.

In an analysis that stretched over months, Wall Street Journal columnist Scott McCartney sifted data and insight from airline industry veterans and landed on a prediction with deep economic implications across sectors. After COVID-19 retreats, there will likely be 19 to 36 percent less business-related air travel than in the pre-pandemic era, he found.

If that prediction holds true, consequences for the airline industry will be profound. Other sectors that benefit from business travel could suffer as well. For hotels, convention centres, and meeting spaces; restaurants; retailers with airport locations; consulting companies; and service providers that cater to travelling business professionals, a decline of this magnitude demands new thinking and new tools to support smarter location strategies.

One Overlooked Cause of Less Travel—The Net Zero Effect

With COVID-19 vaccines now on their way to people worldwide, some business forecasts have improved. Analysts at Goldman Sachs expect economic growth of more than 5 percent in 2021. But for pockets of the economy—including those affected by business travel—sales likely won’t return to previous levels.

McCartney says travel reductions will be driven by classic business influences such as efficiency and cost. One factor he doesn’t mention is the corporate push toward net zero carbon emissions. As more CEOs pledge to go net zero by 2050 or earlier, they’ll take a dim view of business activities that contribute to emissions, including travel by airplane. (Flights tend to be a “dirtier” form of travel than other means, according to a recent analysis.) Earlier this year, health-care provider Bupa Global found that a quarter of business executives plan to reduce international travel in the post-COVID era to lessen their carbon footprint.

Regardless of their motivation, 91 percent of CEOs in a May Fortune survey said they expect business travel to be less frequent [subscription]. If such predictions pan out, companies that rely on business travelers will face a planning challenge. They’ll need to understand where people consume products and services, and use that insight to create a profitable location strategy for stores, offices, warehouses, and other facilities.

Business travel makes up 21 percent of the nearly $9 trillion worldwide travel and tourism market, and a less-than-healthy rebound will create a smaller pie for service businesses to capture.

Long-Term Location Strategy Meets Short-Term Consumer Shifts

To adjust to significant economic shifts, industry leaders need fast and accurate location insight. In the digital age, that’s more accessible than ever. With anonymized information on where consumers are and no-code technology like a geographic information system (GIS) to illustrate changing patterns, company leaders are locating new business opportunities.

Executives are making those adjustments faster than they used to. Traditionally, decision-makers set location strategies for the long term, weighing where to sign multiyear leases for stores and offices or build manufacturing facilities and warehouses. That began to change prior to the COVID-19 pandemic, as CEOs sensed changes in shopping patterns and pushed for shorter commercial real estate leases. During the pandemic, the trend has accelerated. The average lease length in the US fell by 15 percent during the first five months of this year, according to JLL.

The most obvious reason for this decline is the uncertainty created by COVID-19. Business leaders are now more sensitive to unforeseen events, and need to adjust location strategies for factors like lockdowns, work from home, and business travel declines.

Shorter leases are a means to that end—a tactic to help companies become more agile. But understanding how to put that agility to use—how to change business plans as economic realities change—requires location intelligence.

Reliable information is key to understanding current customer needs and possible future customers. Demographics including age, gender, income, and spending habits can be linked by GIS technology to a physical location or catchment area, helping brands identify opportunities and define actions.

Richard Bezuidenhout, Swarovski

Location Intelligence: See Changes Sooner

One indispensable tool for understanding changing economic patterns is a smart map. As Swarovski’s Richard Bezuidenhout wrote recently in WhereNext, companies that use smart maps to fine-tune their location intelligence are more likely to weather disturbances and spot new business opportunities:

This article was originally published in the global edition of Wherenext

How the UK’s utilities are reinventing the way they work to enable them to sustain critical water and energy services.

Realisation is beginning to dawn that business as usual may not be possible again for quite some time. The challenges for all businesses during and following the COVID-19 pandemic are huge, but, for the utilities sector in particular, they are immense.

Water, gas and electricity organisations need to continue to deliver reliable services for all UK households and business premises, not to mention the thousands of hospitals, care homes and other front line services that depend on energy and water to care for the sick and save lives. Yet their day-to-day operations are impeded by limited access to homes and businesses, a depleted workforce and new social distancing rules.  Business as usual is absolutely essential, but impossible – so new ways of working will have to be found.

Throughout the utilities sector, many organisations are successfully addressing the challenges that have arisen from the COVID-19 crisis and are maintaining their vital operations by innovating with geospatial information system (GIS) technology. Taking advantage of GIS dashboards, web apps and mobile solutions, utilities are reinventing business processes to make them more mobile, more efficient or more accessible to large numbers of employees. They are also adapting the way they work to accommodate social distancing and prioritise services for vulnerable customers.

Enterprising utilities are using GIS to:

Empower a home-based workforce

With just a few days’ notice, utility organisations needed to move vast numbers of office-based employees from offices and depots and give them the tools they needed to work from home. Solutions like Esri’s ArcGIS Online allow organisations to make data and core services available to employees via the Internet and enable them to rapidly deliver tactical cloud-based GIS solutions to help them sustain their core operations during the evolving COVID-19 outbreak.

Expand opportunities for mobile working

During COVID-19 Severn Trent Water has equipped its employees with rapidly-configured mobile GIS tools for capturing, checking and updating asset information. In this new agile way, the organisation has been able to make best use of the eyes and ears of employees while they are out on their daily exercise in their local communities to improve the health of its asset data and report issues. For example, employees can report leaks or asset concerns that teams can then respond to quickly enabling them to improve their services for customers and operate more cost effectively.

Understand risk and plan accordingly

As a pandemic of this type is unprecedented in our lifetime, utilities have needed to quickly gain a detailed understanding of the risks. A number of utilities have created ArcGIS dashboards to track the spread of virus hot spots using data from Public Health England, as well as analysing data from the Office for National Statistics about the locations of vulnerable people. With this insight, they have identified locations where there were high proportions of recorded cases, which ultimately directed the planning and scheduling of maintenance services to protect employees and deliver the best possible services for customers.

Support vulnerable customers

If an emergency were to occur during lockdown, such as a power cut or water outage, utilities would have a responsibility to provide priority support to vulnerable groups and healthcare providers, such as hospitals. Scottish Water has created a versatile app that enables its control room staff to quickly identify all the vulnerable households, hospitals, care homes, prisons and other vulnerable groups affected by an unplanned water outage in minutes rather than an hour. This ArcGIS web app accelerates the organisation’s emergency planning, enabling it to deliver bottled water or tanks of water to vulnerable groups much more quickly in the event of an incident. It now has the ability to deliver a faster response to priority customers not only during the pandemic but any time an incident occurs, any time in the future.

Operate with social distancing

Social distancing guidelines are forcing utilities to completely reorganise the way that jobs are planned and carried out. At the simplest level, two engineers can no longer travel together in the same van or work in close proximity in the same substation, but it is much more complicated than this. Using ArcGIS, utilities can view planned maintenance jobs in a geospatial context and over time to identify the best way to allocate employees, vehicles and resources to ensure that essential works can be completed in a safe way.

Limit the spread of the virus

Current scientific advice indicates that the COVID-19 virus can survive on some surfaces for over 24 hours. Consequently, some utilities are now considering using ArcGIS to help them plan work schedules to minimise the number of people who actually need to touch certain assets, within a specific period of time. ArcGIS can be used to help establish working teams that do not interact, do not visit the same substations or do not touch the same fuse boxes within a 72-hour period to minimise the risk of large numbers of employees having to self-isolate if a colleague contracts the virus.

In many ways, the utility sector is shining a light on the way forwards for other industry sectors. Using ArcGIS, it is rapidly introducing new, more efficient, socially-distanced ways of working and focusing on the needs of the most vulnerable in society. Most importantly, utilities are successfully overcoming challenges to continue to deliver the services that we all depend on. Within just a few weeks, they have clearly demonstrated that when business as usual is essential, business as usual evolves.

Craig Hayes - Esri UK

Craig Hayes is Head of Practice for Critical Infrastructure at Esri UK. In this role,he advises the UK’s water, electricity and gas utilities, telecommunications companies and transport organisations about how to optimise the use of GIS.

As the COVID-19 pandemic impacts the rules of human interaction, business and organisational leaders must establish a new definition of workplace safety for their facilities.

In this Think Tank, Esri’s Brian Cross talks to indoor mapping experts Will Isley and Beau Ryck about the conversations they’re having with business leaders, what it means to establish a common operating picture of an organisation's facilities, and how to create a new level of safety in the workplace. Esri’s Pat Wallis provides additional context throughout the interview.

Brian Cross: We’ve explored the trend of indoor mapping in the past, and that topic is quickly gaining attention as business leaders contemplate new patterns of work and challenges to safety and health in the workplace.

To put this in perspective, I thought we could start by discussing what workplace challenges executives were solving with indoor maps before COVID-19?

Beau Ryck: The main challenge has been developing a system of record that organises building and floorplan data. Employers use this to improve workplace experiences for employees and visitors—through wayfinding and room-booking applications, for example. They also use the data to manage maintenance more efficiently. Indoor maps create a common operating picture that allows them to manage buildings and equipment as assets.

Cross: Now you’re both helping companies address new priorities as they respond to COVID-19. We’ll explore those in a minute, but I’m curious whether you see this pandemic having long-term effects on the workplace?

Will Isley: I think COVID-19 will change the workplace in lasting ways—similar to the way September 11 changed security practices in the airline industry. Safety has always been a basic premise of the workplace, but you might say it lived in the background. Now it’s at the top of every executive’s agenda, and will be for the foreseeable future. Companies have to protect their employees, because if workers aren’t safe, operations can’t continue.

Ryck: I agree. Safety challenges in the workplace won’t go away once the COVID-19 threat fades. Natural and human-made disasters will continue to occur, and executives will need situational awareness of their facilities to manage those events. I think the pandemic will drive businesses toward better systems for dealing with hazards and disaster planning. Longer term, as business leaders grow more comfortable with a remote workforce and flexible working schedules, some might even re-evaluate their real estate holdings and shed leases. It’s really interesting to see how mapping technology is helping guide these decisions.

Navigating a New World of Work

Cross: In the COVID-19 world, what are some emerging uses for indoor mapping?

Isley: Indoor maps are being used in three aspects of the COVID-19 pandemic. The first is direct response. This mostly involves front line locations like hospitals, shelters, pop-up facilities, and campuses that are providing emergency services and health care. They need to understand how to adapt their indoor space to safe distancing, help people find the resources they need, understand and address facility issues, define new health procedures, and more.

The second technique involves planning indoor space for use when employees return to work. Companies need to map out seat assignments and safety procedures and understand who’s in the office, who’s not. They also need to know where maintenance has been performed and how physical systems are operating.

The third is advanced analysis of the indoor environment. For example, companies are preparing response plans in case an employee contracts the virus. They’re looking to create a common operating picture—a real-time map—of the workplace. That’s a new level of indoor awareness for most companies.

How Executives Are Rethinking Indoor Space

Cross: I imagine a lot of the executives you work with are focused on adjusting physical layouts and procedures as they begin to reopen offices. What does that involve, and what’s different about it now?

Ryck: Before the COVID-19 outbreak, companies were focused on maximising space usage, since property is the second-biggest expense on their books. In some cases, they did this through space-sharing practices like hoteling and hot desking. Some of those practices will survive this pandemic—especially since many employees will now work partly from home and partly in the office. But much more governance will be involved. Employees won’t be able to show up at the office and grab an available desk.

Hoteling, for instance, is a managed process—it can be run on interactive maps that account for social distancing. Employees can reserve space on the map, managers can approve the assignments, and the system will alert maintenance staff when shared spaces need to be sanitised.

We see planners using space analysis to find choke points in their facilities and reduce the possibility of congestion. They’re using indoor maps to make adjustments to the space and ensure social distancing.

Data Points toward Phased Openings

Cross: I imagine executives with facilities in multiple states might find it difficult to gauge the readiness of each property. How will they decide when and how to open facilities?

Isley: The business leaders we’ve talked to are doing location analysis. They know that the COVID-19 reality in New Jersey, for instance, is very different from that in Idaho. Even within a state, infection rates and risk levels vary substantially by location.

Executives know how important good data is to good decisions, so they’re using technology like a geographic information system [GIS] for analysis. For example, they might use GIS to analyse data on COVID-19 trends, including statistics such as the number of days since a county’s last reported COVID-19 case and the status of its infection rate—from emergent to end stage. That gives decision-makers the location intelligence they need to make plans specific to each facility.

Ryck: This is where traditional GIS and indoor GIS intersect. Once executives gauge the readiness of each facility based on state and local data, they’ll map out new procedures within each facility.

Cross: How will they deal with the variations across locations—how will that process play out?

Isley: We expect many companies to create a tiered reopening system. A facility at tier two, for example, might enforce certain rules: open space seating is prohibited, no more than 40 percent of the workforce can be in the workplace, and social distancing is managed very strictly. For a facility at level four, that might mean 75 percent of the workforce is back in the office, visitors are allowed with special permission, and common spaces are open but with limited seating in lunch areas.

Employers will design and manage those scenarios on smart maps. When local and county-level laws and data indicate that a facility can move to the next level of openness, a manager can click on the level 3 plan in GIS, and the indoor map will display the game plan for that tier—for managers and employees.

Responding to Instances of COVID-19

Cross: Despite their best efforts to protect employees, companies could still face a situation where an employee contracts COVID-19. How will organisations deal with that?

Ryck: The White House issued guidelines stating that employers should be prepared to implement contact tracing if an employee tests positive for COVID-19. The guidelines aren’t specific about how that should happen, so companies are looking for best practices.

Some companies are using location technology on mobile devices to allow staff to self-report. If I’m working from home for the day, I check in on the app, report where I’m working, and note if I have any COVID-19 symptoms. Managers see a map of who’s in the office and who’s off-site, and what everyone’s status is.

This mapping capability supports basic contact tracing, because employee check-ins are saved for a certain period—say, three weeks. If an employee reports symptoms, a manager can essentially rewind the map over the past two weeks and see which colleagues that employee may have come into contact with.

We’re working with large organisations in public and private sectors that are doing this for thousands of employees.

Isley: In certain high-risk work environments, companies will want to do more rigorous contact tracing. They’ll use a combination of mobile devices and indoor positioning technologies like Wi-Fi access points or Bluetooth beacons to understand where employees are as they move through facilities. Apple, Google and other tech companies are providing SDKs for proximity detection, too. If someone tests positive for the virus, algorithms in GIS technology can help managers figure out who that person came into contact with.

Restarting Operations

Cross: So far, we’ve focused on employee activity, but what about the physical operations of offices and workplaces?

Ryck: If facilities have been largely unoccupied or running at minimal capacity for some time, organisations will want to ensure that mechanical systems are functioning safely as operations resume. Historically, maintenance involved a lot of paper-based work orders and physical handoffs. The trend of using digital maps to integrate with work order systems—to manage everything from sanitising common areas to changing air filters—will accelerate. That minimises in-person contact and helps with social distancing.

The Common Operating Picture Moves Indoors

Cross: What I’m hearing across this conversation is that leaders are interested in creating a common operating picture of the workplace. They need to see the workplace in ways they never have before. They need to know how many offices are occupied, where staff are congregating, and which areas need cleaning. Indoor maps are creating that operating picture for managers and executives.

Isley: And for employees, too. Because as space plans change, employees will need to adapt. Some will end up in different office locations, and all will have new procedures to follow. Having an indoor map on their phones will give them the information they need—everything from which areas are off-limits and where hand sanitiser stations are, to the best way to navigate to a conference room or café.

That map will be their common operating picture, and it will update as facilities graduate to fewer restrictions, based on local conditions. This level of awareness will be key to keeping employees safe in a new environment—and helping them and the businesses they represent remain as productive as possible.

Additional Resources for Business and Organisational Leaders:

• New OSHA guidelines for the workplace [via OSHA]
• 2-minute video on which factors should be considered in determining where to reopen [via Esri]

This article was originally published in the global edition of WhereNext.

Editor’s Note: For business executives and professionals seeking resources to respond to COVID-19, visit this site dedicated to business continuity.  

It has been a dispiriting decade for the multinational COO, keeper of the global supply chain-dispiriting enough to send COOs scrambling for a new model of global production and distribution.

Natural disasters costlier than any in history have battered the globe, knocking out production facilities, damaging transportation routes, and repeatedly interrupting the flow of goods. Economic nationalism has flared, prompting tariffs between world powers and driving up the cost of cross-border trade. Now a pandemic has decimated consumer demand for some products, magnified it for others, and prompted rolling factory shutdowns worldwide.

Signs of shifts and soul-searching are emerging. In October 2019, the American Chamber of Commerce in China and its counterpart in Shanghai asked 25 US multinational companies whether decoupling—separating the US and Chinese economies—would be impossible. Two-thirds said it would be, according to the Wall Street Journal. By March 2020, that number had dropped to 44 percent.

Under siege from climate change, economic nationalism, and COVID-19, the bedrock of global manufacturing for the past several decades—low-cost production in Asian countries and complex, extended supply chains—is showing fissures.

To Expand or Contract: That Is the Question

Experts have suggested divergent response strategies. Some say manufacturers should regionalise the supply chain—confining it to a smaller geographic area to create more reliable access to raw materials and finished goods. Others suggest more geographic dispersion—creating redundant sources of supply around the world to dampen the risk of business interruption should a particular region or supplier falter.

Despite the differences, there’s agreement that supply chain visibility is a linchpin of both approaches. As global risk adviser and insurance brokerage Willis Towers Watson recently explained, companies should know who supplies their suppliers. That is, they should inventory the Tier 1, Tier 2, and Tier 3 participants in their supply chain. If executives hadn’t done so before the COVID-19 outbreak, experts say, they need to now. Which means many COOs have a lot to learn—and quickly.

With their March Harvard Business Review article “Coronavirus Is a Wake-Up Call for Supply Chain Management,” Arizona State professors Thomas Y. Choi and Dale Rogers reinforced that view, saying the small group of companies who mapped their supply chains before COVID-19 was better prepared for disruption than those who did not.

As some executives have discovered, supply chain awareness depends heavily on location intelligence.
Mapping the locations of factories, distribution centres, and transportation routes helps a company adjust quickly in moments of crisis—a key factor in mitigating risk. It also gives them a road map to more significant, long-term changes, if they’re bold enough to make them.

Change Is Hard to Come By

Despite profound bruises to the global supply chain in recent years, COOs and their fellow CXOs have maintained a global production paradigm that looks much like it did a decade ago. Many observers predicted otherwise.

As climate change began to materialise in the form of more frequent and punishing storms, wildfires, and other catastrophes, supply chains suffered. The 2011 earthquake and tsunami in Japan are oft-cited examples. Amid the devastation, automakers, chemical manufacturers, and computer companies faced months-long delays in parts and supplies that hobbled production further down the supply chain. After they recovered, some companies increased their safety stock and added buffers to the just-in-time manufacturing model. But few made significant changes, according to Reuters.

In 2018, the US set off trade wars against countries around the globe—most notably China. Billions of dollars in tariffs created a material impact on consumer goods prices and companies’ bottom lines. Supply chain rethinking came into vogue again, and some companies made adjustments. Several Apple suppliers, for instance, initiated plans to move production out of China, according to a Bloomberg report.

But companies didn’t fundamentally change the model. They mostly shifted production to countries such as Vietnam, Indonesia, and India, which means supply chains remain long and complex.

A Feeling of Inertia, Interrupted by a Pandemic

So why have most global CXOs balked at fundamental supply chain changes?

In a recent MIT Sloan Management Review article, Harvard professor Willy Shih pointed to a decidedly human answer: complacency. Even after Japan’s 2011 earthquake and nuclear meltdown and a spate of trade wars, he wrote, some executives felt locked in to the model of Chinese production that has fuelled global supply chains for so long. For CXOs, change isn’t just unsettling; it’s also expensive.

Now, after years of discussion about restructured supply chains, the COVID-19 pandemic is delivering another powerful provocation. Like the Chamber of Commerce polls in China, a series of PwC surveys suggests COVID-19 might stir change. The consultancy has asked global CFOs what supply chain changes they plan to make in response to the pandemic. In late April, the most popular response—with 52 percent selecting it among their top three—was to develop alternate sources of supply.

Still, the study’s authors call supply chain relocations a last resort, due to the expense. What they expect is for manufacturers to invest in forms of automation that will deliver improved data and help them make better decisions.

The Visibility Challenge: Mapping Today’s Supply Chain

Which brings us back to the strategy everyone seems to agree on: mapping a company’s supply chain. Whether executives intend to make major changes, or simply want to be prepared for on-the-fly adjustments during a disruption, they need visibility before they can make good decisions.

US automaker GM provides a meaningful example. After more than a century in business, the company has learned a thing or two about global supply. Its supply chain risk management team led an effort to map suppliers and distributors worldwide—including where they are, what they produce, and where it goes next. Once team members gathered that data, they placed it in a geographic information system (GIS) for mapping and analysis.

Using GIS and companion technologies, the risk management team monitors alerts for disruptive events worldwide. Based on the location and scope of each event, the team quickly generates a map that shows which suppliers are affected and which parts and materials they deliver to GM plants. Alternate sources of supply can then be pinpointed and ramped up.

The interactive map helps the automaker navigate quickly around disruptions. Due to its risk mitigation capabilities, it has also lowered the company’s insurance premiums.

While this brand of location intelligence is pivotal in helping GM analyse and respond to supply chain disruptions, it exists thanks to a lengthy data gathering process. Mapping the supply chain involves talking to each Tier 1, Tier 2, and even Tier 3 and Tier 4 supplier, carefully cataloguing where they are and how they contribute to the network.

Arizona State professors Choi and Rogers call the process of supply chain mapping resource-intensive and difficult. But they note that during the COVID-19 outbreak and other disruptions, executives who understood where parts and sub-assemblies were produced, where distribution centres were located, and how materials flowed along supply routes were the first to arrange alternate sources of production.

Scenario Planning for Tomorrow’s Supply Chain

The question that dogged COOs before the COVID-19 pandemic will surely remain when it subsides: Is it best to tweak, maintain, or redesign the global supply chain? The forces behind that question include climate change, economic nationalism, and now a worldwide health emergency.

For executives who choose to make strategic adjustments, GIS’s analytical capabilities play a role. For instance, analysts can map out what-if scenarios for a company contemplating smaller, regional supply chains. They might map several distribution models to see how reliably and cost-effectively goods will reach target markets from various production hubs.

A recent World Economic Forum blog summarises the importance of supply chain visibility succinctly. During normal times, the authors write, visibility helps companies drive efficiency into their supply chains. During disruptions, visibility is crucial to understanding impacts and executing workarounds.

According to PwC, it’s too soon to tell whether the supply chain will change markedly following a decade of disruption. The world feels especially unstable right now, and when risks accumulate, humans often cling to the comfort of routine.

Regardless of whether global executives make big changes or incremental ones, the best plans begin with a map.

This article was originally published in the global edition of WhereNext.