Firing on all cyclinders
John Woodruffe, director at CUBE Thinking, offers planning tips for manufacturers to bring business through recovery.
Over the last 15 years I have worked with many businesses, mainly in the manufacturing sector. By incorporating ‘Lean’ tools and planning techniques, I help business owners to develop their vision, strategy and action plans through to implementing process improvements in their factories and warehouses.
Cash is King
Usual advice is have enough cash flow saved for a rainy day, but we now need to have enough for two rainy days. Cashflow projections should include different scenarios, for example, worst and best case scenarios or in case of another COVID-19 outbreak.
Reduce breakeven point. Are you spending money on fixed and variable costs, have you negotiated a rent or mortgage payment holiday? Why not also improve payment terms with suppliers and customers?
Talk to your customers
Your customers need to know what your plans are for the next 90 days and how you can help each other. Explain to your customers what your plans are for the next 90 days and then you can tweak these plans to suit them individually if required.
An authentic, sincere conversation is what they are looking for – you will be judged in 12 months for how you are engaging with them now.
And, who are your top customers? Your top 20% of customers will most likely account for 80% of your sales!
Work with your supply chain
Are you single or global sourcing? UK suppliers can help cash flow, offer better payment terms and not payment made as soon as goods are on board a ship. They can also help reducing stockpiling as shorter lead times may be available. Even if this is not ideal, then dual sourcing should be considered to spread the risk, 80/20 or 70/30 are standard splits and its adds some competition between suppliers.
You may need to increase stocks for certain products so make sure it is on the right items. Understand who supplies your suppliers, as they may all have the same supplier!
During the last 12 weeks Cube Thinking has been working with the Boost Lancashire team delivering the #AskForHelp support, which has now moved seamlessly into #BoostYourRecovery.
In this period we have supported over 120 businesses, giving us a great insight into what companies should consider when coming out of hibernation and ramping back up to full capacity.
‘What gets measured gets done’ and the value of having a plan is crucial.
Who is generating ideas that will help your new future?
Is your data able to tell you where efficiencies and future process improvements can add most value? Are you mapping processes, identifying potential improvements?
Communicate with your staff even if they are on furlough or working from home. Tell them what the plans are and involve them in your planning or strategy development to give them ownership and confidence for the future. Unfortunately, there may be redundancies, but it may be good to recruit from within, while considering benefits of new skills from outside.
‘If you always do what you have always done, you will always get what you’ve always got’. Now is the time for change to develop the company for the new future and remember that it is different to BC (Before Coronavirus).
You need a plan to work from with actions, owners and completion dates. You will then need to complete these, which will be quicker having a team with the mindset, grit and determination to implement your plan.