Operations

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Use the downturn to your advantage

If history has taught us anything about managing in adversity, it is that cost cutting alone is not enough to ensure company survival. Successful restructuring is about the effective use of all the assets at a company’s disposal

The need for operational restructuring is being driven by a combination of the current economic crisis and general oversupply in many industries. The more prudent companies will have already begun restricting discretionary spending such as travel and training, the CEO will be focusing on the core activities of the business, reducing capital expenditure.

None of this will be new and, given previous times of oversupply and recession, probably only to be expected. However, this is a good time to reflect on the lessons learnt from major restructuring exercises in past recessions and understand whether these measures in, and of themselves, will be enough to ensure survival for today’s major corporates.
Flexibility is the name of the game for businesses seeking to improve their operational position in a downturn.

Winning companies stay light on their feet, deploying all their resources in the areas of the business most likely to do well in trying economic conditions, while directing their operational energy towards the opportunities that arise.

What questions should I ask?
  • How vulnerable is the business to its customers and suppliers being affected by the downturn?
  • Which of the business' products, customers or channels most creates or destroys value?
  • Ongoing projects: am I monitoring key operational projects closely? Who is responsible for their delivery?
  • Are milestones being met? Are they still a priority for the business?
  • Have I quantified all my direct and indirect people costs and how am I planning to reduce those costs?
  • If redundancies are being considered, how will I manage the process?