Recession does not have to be a dirty word. With the right foresight, planning and action, many manufacturing companies not only survive, but benefit in the long run due to the new processes implemented such as labor optimization and inventory control, created because of the economic downturn.
Should it Stay or Should it Go?
The first step in preventing an economic downturn from cutting into your profits is to conduct a stringent analysis and streamlining of your company's cost structure. The administrative and operational infrastructure of all organizations tends to grow in good economic conditions, but rarely is that matched with swift reduction when business volume ebbs.
Understanding your company's cost structure is essential for reducing or eliminating costs that don't impact sales. Both client-facing and support staff are involved in indirect expenses on a day-to-day basis. They are an excellent resource for identifying wasteful practices. An organization-wide approach to removing no longer necessary direct expenses and reducing newly unnecessary indirect expenses is the best way to ensure success.
With their input, as well as your company's current sales projections, you can reasonably determine your available operating funds. This is very important as you need to know how much you need to cut back before actually beginning the process. There may be more capital to work with than originally thought.
Given the current unfavorable business environment, instead of focusing on your annual objectives, you should determine your three-month objectives and related staff accountabilities. These decisions should be discussed with your staff members to keep everyone informed.
After determining your available working capital, formulating your business strategy is critical. Of all the initiatives currently underway, which are most likely to bring money in the door the fastest? Also, which of your initiatives would be the easiest and most cost efficient to complete? These programs should be given the highest priority. While politically easier to execute, irritants and projects with small dollar savings drain resources and attention from improvements that save big money.
Labor Optimization and Communication is Key
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