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Health checkHow to prosper in the current Credit Crunch Climate?
The last month has seen optimism in the UK manufacturing sector sink. This is a major disappointment for many economists who had predicted that the recent weakness of the pound would help manufacturing thrive.
July has seen:
- The CBI predict output to be minus 0.4% in the three months to June and minus 0.5% in the three months to September.
- The purchasing managers index for the sector slide abruptly into contraction territory in June.
- The pressures on price soar to an 18 year high.
So what actions do you take to protect your company from the global crisis?
Many companies feel forced into a strategy of reducing Operating costs and reducing investments, a strategy that is supported by many economists.
However, these companies cannot increase profits in the long term by reducing Operating Costs, especially as invariably this means that operational performance; lead times and delivery performance; suffers.
This approach creates the conditions and subsequent opportunities for other companies to prosper.
Many companies who flourish use the five step process:
- IDENTIFY
- EXPLOIT
- SUBORDINATE
- ELEVATE
- Go back to One (if the Constraint is broken)
The constraint for most of these manufacturing companies is firmly in the market.
This means the limiting factor preventing them from increasing their bottom line and top line is not an Operational Constraint but a Sales and Marketing Constraint.
In order to exploit this Market Constraint a company must build a decisive competitive edge to increase their market share. Building it is not enough; we must also build the operational capability to capitalise on it. This is the subordination step.*
All of this must be done without taking any real risks and jeopardising the future of the company.
If you are working in a UK manufacturing environment and would like to discuss this further, please complete this form, and we will contact you.
