Productivity falls by the wayside during good times. Liberal credit and growing markets prompt managers to gun for brand shares at all costs. Price inelasticity of demand is bound to spill over into coffers of canny raw-material suppliers. Stock market euphoria over better-than-expected quarterly results may be misplaced, because business could have been much better.
A silver lining in the grey clouds of 2008 is that stock investors need not worry as much about waste. Tough operating conditions bring the law of the jungle to the fore. Corporations will either sink very rapidly or simply adapt and become much better. Your own enterprise could be at stake, so productivity leads have secular appeal. Here are three approaches to help you get on top of a cash-flow crunch with flying colors:
1. Link budgets to activities rather than to history. President Carter stirred a hornet’s nest by challenging bureaucratic approaches to allocating scarce resources. You can try Zero-Based-Budgeting just as well. It will not win you many friends, but you will be pleasantly surprised by the swathes of savings that can result.
2. Re-engineer business processes. Do your sales people really need to meet every customer all that often? What if you substitute monthly meetings with web-conferencing instead? Can a layer of packaging be recycled or even eliminated altogether?
3. Love to experiment. Try a price rise through a new pack size. Avoid an expensive promotion in one territory. Allow a new supplier to enter your purchase portals. Offer fiscal incentives for early realizations of your receivables. Demand longer credit periods for some of the things you buy.
No one can make cases in favor of inflation and recession. However, you can make the most of riding-out the current spell of business weather.
Let us hear your thoughts below:
