Manufacturing (Business) Survival - Part 1 of 3
We already felt the economy was slowing by the level of orders for manufacturing as well as the number of jobs we have lost in the manufacturing sector this year. NOW IT IS TIME FOR US TO GO INTO SURVIVAL MODE. (Don’t worry, there will be opportunities to grow during this time.)
Step 1 – Sure Up Relationships with Largest Customers.
We all know the 80/20 rule where 80% of our business comes from 20% of our customers. Make sure you spend time strengthening the relationship with your 20% of customers driving your business and finding out how you can HELP their businesses. I didn’t say discount, unless absolutely positively necessary, I mean add additional value added services.
Step 2 – Strengthen Your Team.
Step 3 – Strengthen Your Cash Position.
- Dead Weight Players - There is dead weight in many of our companies drawing a paycheck but not delivering results. Time to have a heart to heart with the dead weight players to see if they can start delivering results or help them find the door.
- Marginal Players - Many of our companies have marginal players. These are people that have excellent skills but seem to be stuck in a 50% or less delivery mode. Time for another heart to heart to improve their productivity or change the relationship so they get compensated per completed project. If they want to deliver marginal results, let their pay reflect those marginal results.
- Hire Some “A” Players on Bad Times - Due to the real-estate market and the economy, I have a found a number of realtors, mortgage brokers and others, who have good management/operational/sales skills, but the real-estate market and other businesses aren’t delivering. It’s time for you to convince some of these people to join your team, if they can adjust to your culture
Now that you have strengthened your organization, not it is time to go after every single profitable opportunity within your core competency….that makes sense for you to execute of course. The economy is forcing a lot of companies to go back to basics, however, there will be opportunities to grow during this time.
- If you have inventory that is not moving, start offering discounts to get rid of that inventory and get the cash in your account.
- If you haven’t already, start aggressively contacting customers that owe you money to get that money into your account.
- Review your top 10-20 expense items and see where you can cut costs.
- Software-as-a-Service (SaaS) – If you have been looking at purchasing software for your operation (CRM/ERP/PLM, etc.), consider software that is offered via an Internet browser with little to no upfront cost and just a monthly subscription; this is called Software-as-a-Service (SaaS). Here comes a selfless plug for xRP – our online CRM/ERP tool for small to mid sized manufacturers. Try it FREE for 30 Days.
Agent Technologies, Inc.
The Consumer's Workshop: the future of American manufacturing
The Consumer's Workshop: The Future of American Manufacturing is a hand book on how to setup the systems within your company and create the workforce you need to be successful now and in the future. Written by authors that have worked at some of America's largest manufacturers, founded their own manufacturing organizations and helped numerous small manufacturers grow.
The Consumer's Workshop: The Future of American Manufacturing is a must read for today's business leaders. It is insightful and provocative in its approach to where US manufacturing has been, how manufacturing got into the troubles it faces today and what we need to do to become the standard for world class once again. If we want to know how to regain that competitive edge once again, the roadmap is certainly the pages of The Consumer Workshop.
-- Bruce Vaillancourt,Director, NIST MEP Program, TechSolve, Inc.
The Consumer's Workshop is an extremely timely review of how manufacturing strategy developed in the past
and how it will change in the future. The author team clearly demonstrates that companies have to change -- and provide plenty of advise how such a change should take place."
-- Frank Piller, PhD, International Manufacturing Consultant
As the authors make clear, eventually American manufacturing will become the workshop for direct production of consumer's own designs -- or it will be no more. Begin that path by following the steps outlined here."
-- B. Joseph Pine II, author, Mass Customization: The New Frontier in Business Competition
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1) Manufacturing Output decreased 2.8%in October 2008 with durable goods down 2.5% and nondurable industries down 2.9%. Source: Federal Reserve Board
2) Manufacturing Employment fell by 90,000 jobs in October 2008. (27,000 were off payroll due to aerospace worker strike.)
Source: Bureau of Labor Statistics
3) Manufacturing Trade Deficit in August 2008 decreased $3.2 billion, or 4.3%, to $70.9 billion. Sources: Census Bureau, Bureau of Economic Analysis
4)Manufacturers' New Orders in September 2008 decreased $11.2 billion, or 2.5%, to $432 billion. Source:Census Bureau
5) Manufacturers' Inventories decreased $4.1 billion, or 0.7 %, to $558.7 billion. Source: Census Bureau