There’s no question that manufacturing companies have a front row seat on the turbulent rollercoaster known as the current economy. But even though industry health has historically been a good indicator of how the country is doing overall, the picture of the future is currently anything but clear. While some indicators foreshadow slow recovery, others are more cautionary and, for many, this has made planning feel pretty on par with tossing a coin – even with manufacturing’s insider insight.
So, the question is: How should manufacturing companies approach end-of-year planning, and even prepare for growth and success, when uncertainly appears to be the only certainty for 2013?
It goes without saying that every company needs to conduct end-of-year planning, regardless of economic predictions. But it’s even more critical now. In reality, the more uncertain the road, the more important it is to not only make time for end-of-year planning, but to also make sure that the planning effort is extremely solid and highly strategic. If growth is an objective, the imperative for planning goes up exponentially.
As consultants focused on innovating ways to help our manufacturing clients increase efficiency and reduce costs, we take a global approach to year-end planning that considers all contributors and obstacles to profitability and all aspects of the organization.
Here are seven end-of-year planning steps that can set the stage for growth and success in 2013 for manufacturing firms:
- Success Step #1 – Take the Big and Little Snapshot: Assessing where your company is today is an obvious step one when it comes to planning. Yet it’s easy to neglect to assess the complete organization (macro level) if the planning process is too micro-focused to start; and conversely, sheer lack of time can make the macro level seem sufficient when it’s not. Point is, you need a comprehensive picture that includes both high-level financial and operational information such as revenue, cost of source materials and fixed/variable costs overviews related to processes, systems and staffing; as well as raw data and more detailed reports.
- Success Step #2 – Get Intimate with Your Competition: Understanding your competition and how those companies impacted your business in 2012 enables you to make projections about their potential impact for 2013. During your competitive analysis, review your company’s strengths over its competitors, as well as what advantages your competition has over your company.
- Success Step #3 – Welcome Weaknesses: Identifying and analyzing your company’s weaknesses is the only way to determine changes that need to be made to reach the next of level of growth and success. Once you understand your company’s weaknesses, develop a Process/Profitability Improvement Plan that includes short- and long-term adjustments in property, plant and equipment.
- Success Step #4 – Fill Your People Gap NOW: End of the year is the best time for manufacturing companies to address skill gaps. Many highly qualified individuals are looking for work right now, which means you have your pick of the best people. You’ll have more choices and you won’t have to hire someone simply because he or she was the only one who sent you a resume.
- Success Step #5 – Set Goals Beyond Pure Profit: Many manufacturing companies set revenue and profitability goals and stop there. Beyond bottom line benchmarks, set growth objectives that will dramatically increase your company’s ability to be profitable, such as improving your company’s standing in the marketplace.
- Success Step #6 – Be Bold in Your Aspirations: Just because the economy is down doesn’t mean manufacturing companies should set low-bar goals and be grateful for mediocre results. Set motivating stretch goals that inspire a “success” mindset, rather than goals that foster a doom-and-gloom perspective.
- Success Step #7 – Be Inclusive and Create Consensus: Manufacturing companies that limit year-end-planning participation to those in leadership positions miss on out on deep insights and the literal wealth of knowledge that every person, department and function brings to the table. After all, every person will look at processes such as budgeting, marketing and lead generation from different perspective. Additionally, make sure your team agrees to stated goals and expectations during the planning process – before 2013 arrives.
A down economy has a way of derailing plans and causing even the most seasoned and stable leaders to abandon growth goals for a defensive posture. But the deeper a company looks and the more intentional it is when planning, the more likely that organization is to surpass goals – no matter which way economic winds blow. Now more than ever, it’s time to hold steadfast to a formal planning process – and even allow outside experts to collaborate with your internal team in problem solving for efficiency and savings.
As we approach the end of 2012, we’d enjoy hearing how the economy has impacted your end-of-year planning process. Specifically:
Do economic predictions persuade you to or prevent you from
making solid plans for the coming year?
How are you preparing for growth and success in 2013
given the economic uncertainty?
We invite you to share your responses in the comment section below and we’ll also be sharing this article and starting a conversation on LinkedIn.