by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
FLEXO Magazine : January 2009
PLANTS & PROCESSES With their input, as well as your company’s current sales pro- jections, you can reasonably determine your available operating funds. This is very important as you need to know how much you need to cut back before actually beginning the process. There may be more capital to work with than originally thought. Given the current unfavorable business environment, instead of focusing on your annual objectives, you should determine your three-month objectives and related staff accountabilities. These decisions should be discussed with your staff members to keep everyone informed. After determining your available working capital, formulating your business strategy is critical. Of all the initiatives currently underway, which are most likely to bring money in the door the fastest? Also, which of your initiatives would be the easiest and most cost efficient to complete? These programs should be given the highest priority. While politically easier to execute, irritants and projects with small dollar savings drain resources and atten- tion from improvements that save big money. LABOR OPTIMIZATION AND COMMUNICATION Unfortunately, during an economic downturn, some hard deci- in procurement, production, sales, promotion, and supply chain? Indirect employees, usually involved in administrative and cleri- cal roles, are often the first to go. In many cases, these employees are hourly, or non-exempt. Are there part-timers on the staff that perform unnecessary functions? A way to cut overhead without wholesale staffing reductions is through an examination of their schedules. Is there overtime that can be cut? In order to cut labor costs, management also needs to take a long look at the contractors it currently works with. Contractors often have slower response times and are more prone to experi- ence communication lapses. Contractors work for themselves, and often have other clients that distract their focus. Also, con- tractors work for a profit themselves, cutting into company profits. If there is a way to accomplish company objectives using current employees in lieu of contractors, this option should be examined. SALES AND VARIABLE COSTS IN SYNC When projected sales decrease during a recessionary period, production levels need to drop proportionally. This is not the time to tie up working capital in the form of excess inventory. Unlike many types of training, the purpose of supervisor education is not just to transfer knowledge, but rather to help instill a “culture of execution,” an environment in which plans are consistently converted to action. sions need to be made. The most obvious way to reduce costs is a reduction in staffing. A determination needs to be made between those workers that add critical value and those that don’t. One could argue that their entire staff provides critical value. In this case, which members add the least? Are there areas where re- sponsibilities clearly overlap? In this case, one person may need to fill the shoes of two in order to weather the economic storm. Those workers that add the most critical value and are not in the firing line should be informed of this to maintain morale levels. Employee morale is crucial to ensuring that productivity re- mains strong and that the corporate environment remains up- beat. It is very important that you ensure worker participation by including them in communications so they know what is going on. This is an ideal time for additional training. Cross-training workers boosts productivity and flexibility as workers will pos- sess the skills to “cover for” each other in the event of an illness, vacation or termination. This investment in extra training also streamlines the process flow and provides deserving workers with extra responsibilities. Another place to start is through the examination of direct versus indirect employees. Which employees are directly involved Management must identify costs that vary with production level and ensure that those costs are being reduced appropriately. Pay attention to the warning sign of excessive production: a steady inventory increase as measured by day sales in inventory. During a downturn, management should utilize a multi-facet- ed approach to maintain or even increase company margins. One of their top priorities should be to build consistency across the organization regarding production and labor polices. If variable costs do not decrease in direct proportion to production decreas- es, management is failing to do their job. Essential to addressing such inconsistencies, the entire operation must be aligned toward common goals using common metrics. Performance indicators should be reviewed to ensure that they are appropriate measures of your progress to your goals. Profit enhancing key performance indicators (KPIs) include: ??Parts produced per labor hour. This number should remain constant and within predetermined benchmarks especially when production slows down. ??Ratio of overtime hours to total labor hours. As produc- tion slows, the amount of overtime should also decrease. Preferably at a much faster rate as reducing overtime should be a top priority. www. f le xography. org JANUARY 2009 FLEXO 45
End of Year 2008