With all of the talking I do, I didn't expect to lose my voice recently at the ProMat 2009 trade show, but I did. I haven't been sick lately, and I'm no stranger to being on the phone, or talking to people, or presenting speeches throughout the week.
Yet looking back, I find that I had two conversations over and over and over. To the people who were attending ProMat, what I kept talking about, to the point of almost going hoarse, was "Why it's a bad idea to make across-the-board cost cuts in their organizations."
To people exhibiting material handling equipment at ProMat, what I kept talking about, to the point of going totally hoarse was, "Smart companies today have no interest in an after-tax ROI of 30%. That used to be a great return, but in these economic times, companies really need to conserve capital and hold it back for the few really big, strategic efforts where the payback is measured in days."
My voice has come back, but I still feel the urgency to reach out to people when I read and hear what's being talked about in the news, and in trade publications. The big topic is hunkering down to protect your core business. Much of what I read, I would call a knee-jerk reaction to the difficult economic situation currently affecting so many industries and countries.
The important thing you should know is that it's possible to find significant cost improvements, even if you don't have much to invest or many resources to devote. But you must do so in the context of a strategy of cutting ongoing operating and capital costs while maintaining talent costs and strategic costs. So, great – cut, cut, cut ongoing costs, but leave talent and strategic costs alone, or 2009 will not be the end of your worries.
Actual steps that top companies are taking throughout their supply chains are detailed in this article written by the Supply Chain Consortium. The consortium is a benchmarking and best practices forum, made up of 200 companies from various industries. The information in this article is culled from the surveys their members complete, so it represents real-world ideas and things you can start doing immediately if you need to reduce costs.
Also, I hope you take some time to explore the rest of the cost reduction website this article appears within. http://www.tompkinsinc.com/costreduction/
On another note: We'll be starting a podcast series on cost reduction throughout the supply chain in mid-February, and I'll be sure to announce it here. We're putting the plans together now, and it's shaping up to be something else! In the meantime, you can check out this installment in the Global Supply Chain Podcast, "Supply Chains in the Global Economic Downturn."
And if you have ideas or comments to share, please let me hear from you. What would you like to see me blog about going forward? Even if I lose my voice again talking about the evils of "cut, cut, cut," I can always write, right?
Go!Go!Go!