We are well into the New Year and we are cautiously optimistic that this will be a better year, which is one step up from last year when we said it was a ‘definite maybe’ for a better year. When talking to different manufacturers in our industry, I hear the optimism, however there is also a consistent opinion that it will never, or not for a long time, return to the bumper crop of some years past. To borrow a line from a movie: ”What, if this is as good as it gets?”
In my opinion the majority of companies are still in a holding pattern; they are still shell-shocked by the intensity and length of the past recession. Most companies have reacted as well as they could to deal with the downturn. They have cut cost and staff and now they are waiting for the economy to pick up. There is nothing wrong in reacting to the economic realities. If they hadn’t done it they would not be in business anymore. What happens now is that many companies have no resources left to start any initiatives.
When in the past, many employees had to wear five different hats, now they have to wear eight hats. Companies need to accept the new reality. What do I mean by accepting the current situation?
It means the current situation is the starting point. It means that you basically have to work with the resources you have. At least you have to get started with what you have.
There is some truth in the old saying: “If you want to get something done, asks a busy person to do it!”
Piling more work on an already busy schedule will force prioritization and will streamline the decision-making process. During the crisis and the slowdown, decision-making has often been centralized. Now is a perfect opportunity to get staff involved in the recovery. This suggestion might sound a bit shallow, but at this point I do not have a better solution.
After your decision to get started you can use existing textbooks with a back-to-basics approach:
• Improve productivity
• Increase the quality of your product and services
• Improve existing and develop new products
• Develop new markets
There are probably a few more, but do these and you are off to a good start.
Improve productivity
Higher productivity means doing more with less. We have textbooks, workshops and many articles on how to improve productivity. The majority of improvements are through process improvements, organizational improvements, capital investments and skills development. There are different methodologies available and used (lean manufacturing, Six Sigma, continuous improvement, etc.).
A key element in any successful improvement process is a sustainable, practical measurement system. Measuring the productivity within your company and benchmarking it against the best in the industry, gives you the right perspective.
Increase quality of your products and services
Producing products consistently at or above the customer expectation will grow your business long term. Again, knowing where you are falling be- hind your competition will make the difference. Knowing where you are and where you want to be, allows you to map a route.
Improve existing and develop new products
The key differentiator for successful companies is product innovation. In our industry we might not have the equivalent of the iPhone, but there are many innovations you can present: • Increased functionality • Better aesthetics • Higher perceived value • New styles and colors
Each company must find its own equilibrium of how much innovation they can manage. If you compare companies, you will find that successful companies usually are also very active on product innovation.
Develop new markets
Statistics show that Canadian wood- working companies sell their products in Canada and in the U.S. There are some sales to other countries, but generally speaking these are minimal. In the past this has worked well. The exchange rate favoured Canadian manufacturers selling to the USA. Other markets and sometimes even the domestic market were neglected in favour of the more lucrative U.S. market. But that has changed! The U.S. market has shrivelled away for many Canadian manufacturers, and they need to rethink where they can expand. Canada and the U.S. still have growth potential for our manufacturers, however it will take
more effort to be competitive. A few companies have looked outside of the U.S. and Canada and some have had success, but many still need to learn how to do business in other countries. For many readers this is nothing new and most of the companies have the basic idea on what needs to be done and also how to do it.
So, why is it so difficult?
First we need to acknowledge that there is a problem. If we hear: ... it’s OK this way...we have done it al- ways that way ... you cannot generalize this and we are different..., we have denial. If we ignore the warning and if we ‘shoot the messenger’ not even the best program will have a chance of success.
Companies need to be open to analyze their businesses and need to be open to look for ideas on what to change. It might be difficult to listen to criticism, but denial does not help.
The second problem is that as soon as we see some improvements, we tend to let our guard down and go back to the old habits and end up in the same situation, or worse. To change habits for good requires lifestyle changes. One cannot expect different results if one is not prepared to change anything. We have to be ready and willing to make changes in the way we operate our business.
After you accept the possibility that your business is not perfect and in need of change, and after you accept that you need actually make some changes, you can apply the many proven methodologies avail- able. These first two steps are often the most difficult ones.
Sepp Gmeiner is partner with Lignum Consulting. For feedback, questions and/or suggestions he can be contacted at s.gmeiner@ lignum-consulting.com.
