Last October in Baltimore,
ASC Fall Conference attendees gathered for a roundtable discussion of key
industry concerns and to deliberate solutions to the most pressing issues.
can take many forms, especially during periods of political change and economic
uncertainty. Around the table, a dozen or so people representing suppliers,
distributors, formulators and manufacturers talked about key concerns impacting
their companies. After distilling a number of issues, the following list of challenges
ChallengesLack of Predictable
Lack of predictability hampers planning, enactment of development programs and
the ability to take advantage of opportunities. It prevents a clear
understanding of available resources, makes it difficult to provide predictable
commitments, can obstruct policy implementation and prevents effective and
consistent management. In other words, unpredictability can freeze a business
and cause it to become impotent.
Cash shortage and reduced liquidity threaten growth, infringe on research, can
make a company overly or wholly dependent on lenders, and can lead to shortages
of raw materials, equipment, and talent. Inadequate cash can also hamper
marketing efforts, cause the business to abandon long-term plans and disappoint
shareholders. In dire circumstances, cash-flow problems may force a company to
seek bankruptcy protection, putting its departments and employees in a position
where they cannot function. Simply put, a cash shortage can place the future of
the company outside of its own control.
Slowdown in Growth of New Ideas
A tight market can often result in the refocusing of attention from growth,
research and development to financial issues. This change in emphasis shifts or
stops the flow of dialogue, limits risk-taking, and, in effect, changes the
corporate culture. Expenditure on research and development is curtailed,
creativity and reward are constrained, the development of new ideas is
hindered, and the launch of new technologies is postponed or canceled. Without
new technologies, there is further innovation slowdown, which imperils growth
and affects entrepreneurial thinking.
Forecasting is Harder
In order to effectively operate, a company needs to predict cash flow,
availability of credit, demand for goods and services, the value of the dollar,
inflation, transportation costs, fuel costs, and more. Most businesses have
methods of calculating these factors. However, when the economy is unstable,
formerly dependable forecasting models become unreliable. As a result,
long-range forecasting becomes impossible and short–term forecasting is
inadequate. This makes risk management problematic; combined with today’s
rapidly shifting markets, this impacts the development of successful new products.
According to a recent SAP white paper:
...forecasting customer demand is becoming more complex. Customers
want more products specific to their needs and applications, and shorter cycle
times from order to delivery. Consumer demand is inconsistent and difficult to
predict. This makes it hard to forecast future demand based on previous
patterns. Forecasts by nature are inaccurate, and forecasting new products is
even more difficult. The consequences of conservative forecasts can be missed
sales and lost revenue, while optimistic forecasts tie up resources and produce
excess and obsolete inventory.
Fears of Recession Snowball into Fears of Economic
Economic changes and instability, bank failures, and business insolvency create
nervous customers. Fearful of an escalating recession or advancing depression,
consumers stop spending, which limits revenue to industry. This can result in restricted opportunity for
growth, cutbacks, and even cessation of business or insolvency. These risks
intensify the fear, enlarge the snowball and make things worse all around until
economic depression becomes a self-fulfilling prophecy.
Surviving Challenges by Seizing Opportunities
This exercise made clear the interrelated nature of the challenges companies
are facing during these tough times. Relieving fears and maintaining and
growing business requires finding alternatives to the bunker mentality that can
paralyze some companies. This means evaluating and seizing opportunities.
Here’s a list of opportunities the roundtable group developed that offer
solutions to the challenges discussed. It was left to each attendee to take
these back to their companies and take best advantage of them.
- Capitalize on competitor’s weaknesses
- Diversify and maintain diversification
- Get someone to take a stake in you
- Learn to play with a smaller team
- Play offense (e.g., expand your base)
- Network (e.g., exchange talent)
- Trade-up on staff
- Take advantage of government-sponsored programs
- Research growth opportunities
- Target global opportunities
- Get exposure to international markets where the dollar is
- Make employee development a priority - engage your team
- Help people understand their contribution
- Remove personal stresses for higher productivity and greater
- Develop a scoreboard to keep employees engaged
- Clearly articulate current challenges and opportunities
- Retain your best talent
- Reduce waste
- Better manage WIP
- Make revenue-generating acquisitions if funds are
- Find ways to increase cash, including streamlining and eliminating
- Work with customers on purchasing forecasting
- Plan for a lost supplier, lost vendor or lost customer in order to
- Use the time to build infrastructure, plan and restructure
- Innovate changes
- Maintain a presence in the market
- Know your customer
- Closely communicate with vendors, suppliers and customers
Texas flag in front of Governor's Mansion. ACVB Photo.
SIDEBAR: Continue the Discussion!
Join your colleagues and peers this spring in Austin!
ASC 2009 Spring Convention & Expo
Renaissance Austin Hotel