It’s no surprise that many manufacturers are struggling: worldwide lockdowns have hurt demand while all-important supply chains have been badly damaged by factory shutdowns, particularly in China. At the same time, many businesses have been forced to temporarily cease operations, with remote work not an option. Businesses are hurting and even a quick return to normal won’t fix things.
Stay at home orders, radically reduced demand and disrupted supply chains are putting enormous pressure on the manufacturing sector. No matter how the upcoming months play out, manufacturing will be dealing with the ripple effect of this public health crisis for a long time. To help, we are sharing a checklist of cost-cutting solutions for the manufacturing industry.
Checklist for Manufacturing Success
Businesses across the whole economy (and not just in America) are facing similar challenges. Businesses will rely heavily on the experience and expertise of CFOs and finance teams. And they won’t be working alone; HR will play a major role in guiding and communicating tough decisions.
Here’s a preview of what’s covered in the guide:
- Short-Term: Prioritizing Survival
- Medium Term: Becoming a Leaner Organization
- Long-Term: Preparing for Future Success
The first step for any CFO will be to secure short-term security. This is about finding ways to increase cash flow (like recycling and selling raw waste) but also reducing outgoings. Is it possible for you to defer capital spending or renegotiate rent and debt obligations?
Once your day-to-day existence isn’t in doubt, it’s time to consider the medium-term (which likely isn’t looking too pretty either). The good news is, you’ll be in far better shape if you can find efficiencies. Possibilities include outsourcing payroll, considering a TPA (Third Party Administrator) for benefits or reducing employee hours. Even if workforce reductions are unavoidable, you’ll still want to be strategic.
The unique circumstances that created this economic crisis mean it’s hard to predict exactly when a recovery will come and how it will look. When growth and demand does return, manufacturing businesses have to be ready to take advantage and that means making the right preparations now. A big part of this is to invest in frontline managers.
Business leaders in manufacturing are under pressure. CFOs and HR will have to work closely to make the choices that secure companies’ long-term futures. Everything is on the table—use this guide as a checklist to make sure you’re considering all possible options.
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