A transformative change perspective on business, resulting in cost reduction and organisational improvement.
In these trying times, our customers need to re-evaluate their business objectives and business processes. One can feel down and depressed or one can see the opportunities that arise out of this mess. Some immediately reduce costs by letting go of all "unnecessary staff, starting with the temporary staff. A cost reduction of this magnitude has an impact on the remaining staff, because it is considered a breach in the psychological contract between employer and employee. This does not mean that it should not be done; it simply means be aware of the unwanted side effects. Fact is that due to diminishing turnover portfolios, surplus production and office capacity is available. We all do not know how long this will last, but a simple fact of life is that after a downturn a boom (upwards) will happen again. Question is when?
Whoever is made redundant can be told "I will get back to you when the situation turns again", big question though "will they return?" If you (or your customers) believe that things will turn for the better in 2010, assuming that you have some financial backing (and you are not going belly up right now), then now is the time to invest in preparing your organisation for the boom that will follow.
Invest in reorganising your processes (cut unnecessary slack, improve product quality, reduce throughput times, re-evaluate make or buy decisions, prepare for outsourcing to lower wage countries), invest in training of your staff (sometimes made possible by tax reductions or subsidies), re-address your mission and organisation goals. After all for now, there is some time extra available to be able to do so.
- Lean management trajectory from office to manufacturing, including on-the-job coaching & training of staff. Assume that you can half your throughput time, what will be the effect on your competitive position? Assume you can half your waste, and you can separate your waste into reusable (= sellable) raw materials, what is your saving in terms of energy bill, procured good levels, etc.. Assume that you can install a good IT support system in sales support allowing your external partners to configure their own offerings, how many more percentage of sales force will you control (examples available), with the same success rate, you will obtain more orders with the same paid sales support force.
- Outsourcing of components to f.i. India or China, possible cost reductions of approx. 50% taking into account investment in manufacturing drawings, added transport costs, local quality management. With approx. 40% of turnover in goods procured, of which say 50% can be outsourced, a cost reduction of 10% of turnover can be achieved. What is your profit margin at present, as percentage of turnover?
- Strategy revisiting and subsequent organising of business processes (manufacturing, ICT support, marketing & sales, distribution systems). This one is more difficult to quantify, but a clear, shared understanding of what to strive for always results in a more focussed approach to the market, hence a higher success rate in sales, and normally also a better margin on products sold.
Can you allow letting this opportunity pass? So, it is your choice. Do what a lot of other people do, fire staff, reduce your organisation, and ride the storm out, hoping that when it turns you will be able to find the correct people, that you do not need to (re)train the staff, and that when the pressure is on again in a positive way, you do not know how to answer the requirements of that booming market and life will be full of missed opportunities.
Or take an alternate route; invest in getting your organisation ready for the boom that anyhow will follow. Use these times for the better.
Would you like additional information, do you want to discuss, just drop me an Email. First investigative consultation is for free, at least within a 100 km radius around my place of business. By Skype or by Email, the same applies.
Don´t let distance hold you back, just mind the eventual time differences between your location and The Netherlands. In case of a continued project, local support in your area can be organised via various connected networks, always in form of someone that is capable of handling your specific needs.
Update September 2012.
For springtime & summertime 2013 we again have possible openings for maximum 12 persons on a 10-day all-inclusive trip in the Mediterranean, days packed with reflective moments and hands-on exercises to address above issues, days allowing you to discuss in-depth with fellow travellers so you obtain maximum input for your own organisations and next steps.
If a company special suites you better, it can be organised for management teams and direct responsible specialists or their spouses (up to 12 persons). All it takes is a meeting, so we can draft an appropriate program for you in The Netherlands or abroad