Jump on the Fast Track to Recovery


Jump on the Fast Track to Recovery

Don’t look now, but the recovery has begun — if not for you, then for your competition. In fact, if you are sitting back, waiting and watching for a dramatic surge in the U.S. economy, it’s likely you’re lagging behind while prospects for your competitors are getting better. Smart companies know they can’t cash in later if they don’t invest now.
Are you feeling it now? Have you seen the increasing surge in business? Have you heard the buzz about all of the increased activity? Business is picking up, and we hope you’re getting the benefit.
In a recent article in Industry Week, a 10-point program was given to companies in search of a game plan to capitalize on the recovery:
1. Maximize assets: Asset management must replace the “fix it when it breaks” mentality. Replace those traditional reactive, function-based approaches with asset-management systems that are proactive and integrated into the production process. Search for solutions to replace labor-intensive data analysis with automatic analysis, fault resolution and work notification.
2. Design for lowered costs: The analysis should begin when the product is being designed, say engineers at Boeing, Dell Computer and Harley-Davidson. All three employ Design For Manufacture (DFM) software to integrate cost estimation with design automation. Boeing, for example, was able to reduce the number of parts in a helicopter dashboard from 74 to nine. Savings per dashboard total in the thousands of dollars. Dell uses the software solution to increase computer output by more carefully matching designs to a plant’s production equipment. At Harley-Davidson, DFM is the basis for collaboration with suppliers.
3. Add value by partnering: Partner with firms or associations that extend the reach, awareness and potential sales of your product. Duron Inc. of Beltsville, MD, and Professional Paint Inc., Denver, CO, provide a nice model with their marketing alliance to sell paint, wallcoverings and sundries to major national accounts. The alliance provides both entities with nationwide distribution, which each lacked independently, and broadens their product offerings.
4. Become reacquainted with key constituencies: The key is to make prospect and market data collection a strategic effort, not something left to the sales force. Too many companies have a poor sense of who their customers are due to lack of information — or, almost worse, a wealth of collected but unformatted and undistributed information.
5. Refocus on profitability: Consider using profit optimization (PO) to influence strategic decisions. The idea behind PO is that by understanding the revenues, costs and margins involved, companies can make better-informed decisions about investing in customer, distribution and product programs. For instance, one company was able to increase net income by 8 percent by identifying and concentrating on the 18 percent of its customers that provided 82 percent of its profit.
6. Shore up sales forecasting: Implementing collaborative forecasting requires companies to first establish a formal sales and operations planning process. Manufacturers can use this process as the basis for communication and discussion among trading partners. For example, Fender Musical Instruments of Scottsdale, AZ, which uses the Demand Solutions Requirements planning package from Demand Management Inc., is establishing collaborative planning efforts with major accounts that represent about half its business.
7. Think globally and politically: Even as the U.S. economy continues its recovery and exports stand to benefit from a weaker dollar, the rest of the global economy is gearing up for better times. A stronger euro, relative to the U.S. dollar, should help check rising inflation in Europe. Japan is poised for growth again, too. Meanwhile, caution has its place: Political risks abound around the world, particularly in the Middle East and on the Indian subcontinent. Both Western Europe and the United States remain possible targets of selective and wide-scale terrorist attacks. Examine supply chains and marketing channels to reduce vulnerability to disruption. Prepare contingency plans that can be quickly executed.
8. Attack health-care costs: The cost to supply health-care benefits is skyrocketing, but strategies are emerging to control these costs. One is to target drug costs. According to Express Scripts Inc., a pharmacy benefits management company, prescription drug spending is expected to soar 15.9 percent by the end of 2003, and drug prices will climb 13.5 percent by 2006. But you can fight the drug war by cashing in on generic drugs. By persuading employees to opt for non-name-brand alternatives, companies can cure a lot of financial headaches. In fact, General Motors has saved nearly $50 million over the last two years just by asking its employees to consider generic-drug alternatives. Concerned you may be asking employees to risk their health to save the company money? Don’t be. Many generic drugs are just as potent and safe as their big-ticket brothers. However, employees need to ask their doctors and pharmacists if a generic version is available and if it is right for them.
9. Revisit supplier relationships: Remember that the recession has been tough on your suppliers, too. They may not be the companies they once were, or their goals may have changed. A drastic economic downturn is the perfect time to plan radical new ideas for sharing assets, such as employees or equipment, and collaborating on lowering costs.
10. Reward valued employees: The recession has made for an employer market, but as the recovery picks up speed, many employees may jump ship in hopes of a better life on the other side of the river. What to do about it? Empower your employees, making it less attractive for them to leave your employ. Take care of the people who work for you. Recognize their accomplishments with frequent and sincere praise. Take time to single out employees who have gone well beyond the call of duty.

Article contributed by the Parking PT team.
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