The current economic crisis has left many manufacturers in a maelstrom of challenges. The main challenge has flipped to coping with a diminishing, rather than an increasing level of demand and growth. The solution to both challenges is the same – look to innovation to bridge the gaps in your business, because the companies that succeed during tough times are those that create new opportunities in an environment where others are floundering.
Innovation can take many forms and can be as broad or as focused as needed to suit business requirements. However, there are two areas where an innovative approach would have a significant impact on the business. These are: protection of the businesses cash flow; and the identification of new market opportunities by clearly understanding the "value" of the product or service being provided.
Cash flow is driven primarily by the cash-to-cash cycle. For any business to survive, its cash position must be protected. If you can identify and minimise the wasteful activities within the order-to-delivery cycle, you stand to be more productive and ultimately, more profitable. In particular, by looking at ways to minimise the time between paying for raw materials and receiving payment for products and services sold, cash-to-cash cycles can be significantly reduced. There are various methods manufacturers can use to do this, including: negotiating mutually favourable payment terms with both suppliers and customers; implementing inventory optimisation projects for high-use and low-use stock; and negotiating with suppliers to issue consignment stocks in order to minimise outlay until actual use. In these cases, there is a need to objectively understand the supply chain process and identify opportunities that lead to implementing the right solution. QMI's new Manufacturing Strategy service has been developed to assist manufacturers identify gaps and opportunities within their manufacturing processes, including the cash-to-cash cycle, so they are better prepared to cope with market volatilities in the months ahead. This service is available at subsidies of up to 50% and eligibility criteria apply.
In boom times, market specialisation was the catchcry. In our current environment, market specialisation is risky because there is no buffer to protect the business from a downturn in a particular market. Counter-intuitively, diversifying and accessing new markets can actually give manufacturers more stability. By identifying new market opportunities, Arena Engineering (see case study page 5) grew the business and increased surety of revenue through its fabrication division. QMI Solutions' ICN Queensland division helped Arena do this through nominating it for a major contract to supply fabricated debris fences for a V8 Supercar project. Arena won the contract and describes it as their largest project on record. The key to success here was for Arena to be able to understand the value it brought to customers, to clearly identify its Sustainable Competitive Advantage and then to bid on a contract in a non-traditional business area using its current skills base.
To support manufacturers further, and with the assistance of the Queensland Department of Tourism, Regional Development and Industry (DTRDI), QMI Solutions is delivering a series of seminars throughout Queensland during March and April. This series of seminars shows manufacturers how to identify and leverage key opportunities within their business and be better equipped to make strategic decisions in the context of the global financial crisis. Keep an eye out on the events calendar on the QMI Solutions website at www.qmisolutions.com.au for dates in your region and to register.
QMI Solutions is also implementing its own diversification techniques. With several third party providers now on board to deliver our products and services, we are broadening the scope and reach of expertise available to Queensland manufacturers. Additionally, collaboration with the Federal Government's Enterprise Connect program gives Queensland manufacturers numerous levels of business and technical support.
We are committed to taking bold, proactive steps to ensure the successful future of the Queensland manufacturing industry, and I thank you for your ongoing commitment and dedication to your journey to manufacturing excellence. For more information on any of the initiatives I have mentioned, contact us on info@qmisolutions.com.au or (07) 3364 0700.
For more information or advice, please contact:
Consultant: Jim Walker
Phone: 07 3364 0700
Email: info@qmisolutions.com.au