Best Practices

At some point in 2022, “COVID-19 will become an endemic disease in most places,” Bill Gates said last year. If this is the case, people will not have to manage their lives to such a significant extent around the virus, and the sharp fluctuations in demand for oil-related products of the last few years may subside. Outbreaks may continue in certain locations, especially during winter months, but the response will be more measured and predictable. For our industry, this could mean a return to more predictable supply patterns and the possibility of coming off “high alert.” Perhaps you will be able to redeploy resources away from emergency management and toward longer-term strategic issues. 

Employee expectations have changed.

Despite the potentially changing face of COVID-19 in 2022, I believe that employee expectations have fundamentally changed. Employees are more powerful now because of the large number of retirements that occurred during the pandemic and we are seeing reduced employee participation in the workforce. Employees have become used to working from home, and events have shown that in many areas this mode of working functions well. Workers are demanding higher pay and better working conditions, and strikes have been occurring where these demands have not been met. 

I suggest that businesses must embrace this new reality and offer employees such perks as the ability to work from home (at least some of the time) and other flexibility that they may be requesting. But if your business has experienced some part of “The Great Resignation,” be sure to consider carefully whether the job really needs to be replaced or if the nature of the work has changed in some way. This can be an opportunity to “right size” your workforce so that you can focus the increased benefits on an optimized workforce

Electrification of vehicles is accelerating.

In 2021, GM, Ford, VW, Toyota and other automakers announced plans to deliver more battery-operated electric vehicles and in some cases to phase out sales of new vehicles powered by fossil fuel. Electric trucks are a little behind but are nonetheless a focus for such key manufacturers as MAN, Scania and Volvo. Tesla has been ramping up sales and manufacturing capacity, while newer players, including Lucid and Rivian, are starting to deliver vehicles. The Biden Administration has established an EV-charging action plan and is investing billions to build the national charging infrastructure. This trend cannot be ignored, even though demand for gasoline and diesel fuel will remain for decades. What role will your company play in the long-term future of mobility? Now is the time to be considering this as you work on your strategic plans.

Inflation is likely to continue in 2022.

With demand likely to be strong in 2022, and supply chains struggling to catch up due to worker shortages, chip shortages and weather impacts, I believe inflation will continue in 2022. The annual inflation rate in the United States was 6.8% in November 2021, the highest rate since June 1982. The Federal Reserve Board has indicated it may raise interest rates in 2022 to try to cool inflation, especially in the housing market. Inflation is also higher in many countries around the world; a Pew Research Center analysis of data from 46 nations found that 39 countries had higher inflation than in 2019, and in 16 of the countries—including the United States—the rate was more than 2 percentage points higher than pre-pandemic. This may ease by the end of 2022 but presents a current challenge. 

Be sure to review any price increases by your suppliers and ensure they are supported by data. Pass on price increases quickly to customers when justified. Consider approving new suppliers when there is an incentive to do so. Be sure to take your supplier performance during the pandemic into account in future supplier decisions, as no doubt you learned a lot about your suppliers and their vulnerabilities during this difficult time.

Conscious consumption is growing.

Consumers are becoming more conscious with regard to the goods and services they buy. They want to buy from trusted companies and brands that they trust and that care about people and the environment. A report from the McKinsey & Company consulting firm estimated that 60% of global millennials are willing to spend more on brands with a corporate social responsibility commitment. According to Morgan Stanley, 86% of millennials are interested in sustainable investing.

Many companies are emphasizing sustainability in their products and messaging. Levi’s recently launched the “Buy Better, Wear Longer” campaign to bring attention to the environmental impacts of fashion consumption. Rothy’s has pioneered 3D printing of fashionable footwear using recycled materials. As a company in the oil, lubricants or additives business, you may find it difficult to align with this trend, but I think it is possible. Consider how to build into your company brand or individual products characteristics that are more sustainable.

I wish you all a safe, productive and profitable year in 2022!  

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Contact her at saralefcourt@gmail.com or (908) 400-5210.