NET RESILIENCE IN THE TIMES OF COVID

By: Production & Human Resource departments, Fibras Industriales S.A. – FISA

The past 18 months have probably been the most dynamic times for most industries. Normally when some kind of economic “disaster” occurs it affects certain industries at a time. It can be the real estate industries together with the financial industries or mining industries together with production industries and so on. But only once in a century does it happen that almost the entire world economy goes into a spin with domino effects that don’t seem to end.

It all started with a pandemic that closed industries and production lines for a few weeks and that’s without mentioning the full lockdowns most of us had to endure. After full closure of industries, there was a ramp up period that had to be managed together with high infection and mortality rates thus forcing companies to alter entire production methods and redesign safety and working procedures, while trying to maintain production efficiency levels.

Following the initial “shock” period there were periods of relative tranquility on the Covid front but then we all started feeling the butterfly effects of each regional lockdown. Great fluctuation in prices of raw material, extended delivery times as a result of the production stoppages and ramp up periods and after all of the above, issues with global logistical supply in turn also causing unheard of shipping industry price increases and now companies are grateful if they can get reasonable shipping schedules even at the higher prices.

A first step we took was guaranteeing raw material. In April and May 2020 it was very unclear what industries and countries would remain open or closed and for how long.

It is under these and other local political and economic restraints that FISA has been as creative and dynamic as possible in order to overcome as many obstacles as possible and maintain its status as a leading supplier of nets and cages that always delivers on time and never leaves an existing customer unattended.

We believe that over time all companies have to adapt to existing realities and learn how to produce more efficiently in a dynamic world.

When dealing with the above mentioned difficulties, FISA proceeded to implement some major changes in its working methods and it is here we would like to share some of these adaptations.

First, we had to reduce to a minimum potential Covid transmission to personnel in the company. This implied reducing maximum capacity per m2 leading to reduced man power attending certain machines and a loss in efficiency.

As a result, we had to increase working hours to include Sundays and some unnecessary night shifts. It is during these past months that we have greatly digitalized our company and managed to neutralize some of these effects with a brighter future in the horizon.

At the same time as reducing the number of workers at any given time, we had to increase traceability capacity thus separating personnel into clearly identified groups via color wrist bands that helped identify all those in contact with any worker that tested positive to Covid and allowed to implement the adequate isolation procedures.

As part of the requirements for maintaining isolated teams we had to split the lunch break so what was normally a single 45-minute lunch break turned into four and even five 45-minute breaks for different teams. This same procedure had to be applied to the changing rooms hours and the work entrance and exit hours.

In addition to the above, for some exceptional cases we had to organize specialized transport for the high risk personnel so they could avoid the crowded public transport. In the case of very high risk workers we had no choice but to request they remain at home while receiving full pay.

In order coordinate and succeed with the above mentioned targets, we had to create an entire new department that we called the “Covid Human Resource department” and this department is still active during 3 shifts the 7 days of the week and has to serve both our production plant located in Lima and our highly labor intensive net loft located 90km north of Lima.

Following the initial shock and stabilization period FISA had to start ramping up production and guaranteeing deliveries. A first step we took was guaranteeing raw material. In April and May 2020 it was very unclear what industries and countries would remain open or closed and for how long.

It was under this uncertainty that FISA decided to increase its strategic stocks of raw material by 50% and not risk potential inadequate volumes on the production line. This meant placing immediate orders with suppliers despite not having confirmed sales.

In addition to increasing raw material volumes, it was decided necessary to maintain higher inventories of goods in process and in some cases finished goods, this in order to avoid potential future working closures in Peru.

Fortunately, the above mentioned steps proved fruitful and during the second half of 2020 FISA managed to fully supply its customer base with existing and new orders.

The current additional increase in shipping costs and instability of shipping capacities has forced FISA to further increase strategic volumes of raw materials despite the financial costs and the increased capital allocation that is further affected by fast increase in petrol prices that has led to even higher prices of our raw materials.

We believe that over time all companies have to adapt to existing realities and learn how to produce more efficiently in a dynamic world. In addition, it would seem that the world is going thru a ramp up period that will hopefully lead to stabilization period with a balance between supply and demand in the entire production chain. We hope that our supply consistency continues to prove itself and our increased efficiency will lead to future price cuts once raw material prices and shipping conditions stabilize.

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