June 2009
Just as it is crucial to identify a down-turn as early as possible and make the appropriate adjustments, it is equally important to identify the start of a recovery and make the appropriate changes in plans quickly and effectively.
There are many indications that the current recession has reached bottom and business is beginning to pick up again. Nearly everyone believes that the recovery will be slow and long, nevertheless, it appears that the worst is behind us. Now is the time to start — carefully and judiciously, to be sure – ramping back up to higher levels of procurement and production to insure that you will be able to meet increasing demand.
As you start to ramp up, keep the following in mind:
– Keep an eye on the forecast – talk to your customers, reps and dealers regularly and keep a close eye on demand. Monitor and adjust the forecast frequently in order to detect changes in demand as new sales patterns evolve. Keep in mind that you can ‘shape’ demand through your marketing and sales efforts.
– As the forecast changes, keep a close eye on inventory – components and WIP as well as finished goods. Many companies saw inventory levels creep up as demand slowed and have since taken extraordinary measures to cut inventory to the bone. As business increases, there is increased risk of shortages unless you raise those inventory levels accordingly.
– Do whatever you can to reduce lead-times – shorter lead times let you react more quickly, compensating for forecast errors and volatile demand. Get the engineers involved as well as suppliers in lead-time reduction efforts. It is important to understand your lead times and to know which are ‘critical’. Reducing lead time on a non-critical item or process may not help you be more responsive.
– Manage production – be sure to get optimum throughput from your production resources. You have probably reduced staff and are reluctant to rehire too quickly so it is important to get as much as you can from the people and equipment that you have.
We can help you with any or all of these suggestions. Send us an email if you’d like more information.
