Never waste a good crisis - Lessons in staying ahead for Industrial Manufacturing leaders

 

July 2010

 

The leading Industrial Manufacturing companies have been able to use the downturn to strengthen their operations, and improve working capital by up to 15% and gross margins by 1.5%. Some of the best strategies to bring this about included robust scenario planning, aligning incentives to cash and working capital performance, realigning the manufacturing base, altering the product mix and multi-skilling the workforce.

 

Considering the continued economic uncertainty and the fact that there are often more involuntary liquidations in an upturn as companies seek orders and growth without being properly prepared, we have outlined some of the lessons from the leading companies in the sector.

  • Ensure robust detailed plans are in place to cope with both upturn and downturn scenarios for future market dynamics
  • Look at the trade off between cost, inventory and service levels when dealing with pricing pressure
  • Continue the tight controls to ensure the margin benefits of increased volume flow through to the bottom line
  • Re-examine overseas markets and whether these are delivering required value taking into account currency fluctuations
  • Talk to trading partners and relationship managers at their banks now to ensure sufficient trade credit and working capital to get factories back to a higher level of production