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FLEXO Magazine : January 2009
PLANTS & PROCESSES SURVIVE A RECESSION 1. Conduct a stringent analysis and streamlining of your company’s cost structure. 2. Determine your available operating funds. 3. Formulate your business strategy. 4. Optimize your labor resources. 5. Reduce your total cost structure. 6. Improve management skills among first-level supervisors. 7. Conduct an assessment of current company-wide policies and procedures. KEY STEPS TO ??Day’s sales in finished goods inventory. This too should remain constant across good times and bad. ?? Day’s production in raw materials inventory. With so much focus on finished goods, tying up working capital in inven- tory of any form should be on your radar. sistently converted to action. It is the focus on results that distin- guishes this education from typical “management training.” The ultimate outcome sought after is not just a trained supervisor, but rather an improved operation where the best demonstrated production is achieved consistently, and the best demonstrated performance is steadily improving. In addition, management should seriously consider conduct- ing an assessment of current company-wide processes and pro- cedures. Are reporting procedures as fluent as required to support new, streamlined processes? Is company performance in line with industry benchmarks? It is essential to step out of the trenches and shift to a “fact-based view” where emotions are removed from the situation. Management should consider partnering with an operational consulting firm as such initiatives often require the perspective of an experienced and objective third party. These firms specialize in enabling the necessary program changes that adapt your company to current, as well as future business conditions. With a little planning, cost reduction and optimization of resources, virtually any company can survive the hardship of an economic downturn. In fact, while competitors dither, lean times An organization-wide approach to removing no longer necessary direct expenses and reducing newly unnecessary indirect expenses is the best way to ensure success. ?? Maintenance labor hours worked per maintenance planned hour. Planned hours require leadership approval. Are your maintenance people stretching out projects or doing unnec- essary work? ?? Ratio of administrative costs to total labor. If your employee count has dropped, you need to ensure that your admin- istrative costs are downsized to match your new business structure. Do you really need the same number of customer service reps or payables clerks? ??Average span of control. Do you need as many supervisors as before if your direct labor headcount is down? IMPROVING MANAGERS & SUPERVISORS Improving management skills among first-level supervisors or managers gives them tools to improve margins. In an economic downturn, how these front-line managers perform their jobs is crucial as they possess the ability to improve margins at the point of production. To their credit, many companies already recognize this, and are devoting greater resources to supervisor education. Unlike many types of training, the purpose of supervisor educa- tion is not just to transfer knowledge, but rather to help instill a “culture of execution,” an environment in which plans are con- 46 FLEXO JANUARY 2009 are periods of opportunity. All it takes is a proactive approach, proper planning, and streamlining processes. Companies that properly adapt to current conditions will see an even brighter future when the economy shifts upward. ? ABOUT THE AUTHORS: Hugh Pinkus is a project director for Proudfoot Consulting. Proudfoot is the recognized leader in opera- tional management consulting. For more than 60 years, Proudfoot has specialized in implementing change to achieve measurable and sus- tainable performance improvement in client companies. Its teams work with client company management, and with people of all levels of the organization, to design and install programs and increase bottom- line financial results. Proudfoot is a part of Management Consulting Group PLC., one of the world’s top 25 consulting firms, and is head- quartered in Atlanta, Georgia. Recent client engagements include BHP Billiton, BNSF Railway, CertainTeed, ING, Thomson Group, Exide Technologies, Foster Wheeler North America and the HRW division of Houghton Mifflin Harcourt. For more information, contact Joe Froelich at 404-260-0557 or visit www.proudfootconsulting.com. www. f le xography. org
End of Year 2008