The Perfect Storm series - Thought Leadership

4 Value Creation Levers to Manage Your Operations in Today’s Economy

Table of Contents

Managing operations in a turbulent economic environment while preparing for the future of work requires a proactive approach. From navigating supply chain shortages to tackling potential restructures, business leaders need to carefully analyze all their options.

With inflation increasing raw material costs across nearly all categories, the cost of doing business is soaring for many organizations.

It’s tempting to simply raise prices to absorb the costs, but the best strategy is to critically examine your company to manage risks, uncover efficiencies, and support steady growth.

In this third installment of the Perfect Storm series, we’ll be diving into managing cash, operations, and cost​. Read our recent blogs in the series for an overview of what comprises the Perfect Storm of our generation, which we define as the unusual combination of events in today’s business world that have produced an especially powerful and difficult environment for leaders to navigate and lead their companies into the future.

Key areas of impact for managing cash, operations, and cost

Knowing what to do today to address your challenges will help you find solutions for implementing your vision for the future. Focus on these areas:

  • Supply chain logistics: Shipping capacity hasn’t returned to pre-COVID levels. Having a network of dependable regional and local suppliers is essential to mitigating the risks with today’s fragile global logistics.
  • Decarbonization and ESG: Government policies and customer expectations continue to push businesses to take measures that combat climate change, so ESG (environmental, social, and governance) initiatives should remain a priority.
  • COVID resistance structures: More companies are embracing remote working, including hybrid models with on-site and remote work. With less time spent in the office, leaders must ensure employees remain engaged and connected with their managers.
  • Restructures: Adjusting to the new way of business means restructuring operations for shorter interval planning and live results tracking. This demands a significant cultural shift for many organizations.
  • Working capital: Maximizing asset profitability can help ensure operational stability in an inflationary environment. Find opportunities to eliminate waste and optimize your cash resources.

4 value creation levers to prioritize

Within the key areas highlighted above, your organization can start pulling some specific value creation levers today to better manage cash, operations, and cost:

1) Improve productivity and cycle times

Digitalizationisn’t always the solution to optimizing efficiency, but you should leverage new technology and embrace different perspectives. Sometimes, the best ideas come from outside your industry. Look for opportunities to leverage cross-industry innovations, such as the automotive industry’s advancements in energy efficiency for use across transportation, aviation, and even manufacturing.

2) Strengthen raw material and logistics strategies

Carefully examine where you’re sourcing material. Localizing your supply chain may lower costs and reduce disruption as supply shortages persist. A data-driven strategy, including leveraging AI-enabled solutions, can help analyze cost scenarios and identify potential sources for savings.

3) Make S&OP adjustments based on the new reality

Empower people to make decisions quickly so they can adjust forecasts to match what’s happening in the market, and reduce the feedback loop. Your sales and operations planning (S&OP) needs to accurately forecast inventory. If you’re not adjusting to real time, but keep projecting for what your plans were, you may be inflating inventory and wasting in-house capacity and materials.

4) Finetune your ESG strategy measurements

Develop a prioritized plan and have a clear end goal in mind for reducing your carbon footprint. Include ESG calculations in your third-party logistics and seek to engage vendors in your decarbonization initiatives.

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Harness the power of data to implement change

As you navigate your business through the Perfect Storm of our lifetime, managing cash, operations, and cost is critical to taking an offensive approach that enables you to emerge from it stronger.

Proudfoot is uniquely equipped to provide CEOs with a holistic solution for tackling the current turbulent business climate. We view your entire organization to find untapped potential, uncover your hidden millions, and prioritize change.

Leveraging our True Profitability approach, we pull your data out of silos and analyze it from a business operations perspective to understand the greatest areas of impact.

Importantly, we tap into the power of your people to understand where there is room for growth within everyday operations and where the next generational leadership opportunities lie. Digging into those details is the best way to truly assess your organization and build a roadmap to implementation.

In our next blog in this series on the Perform Storm, we’ll cover how to manage your most valuable resource—people—with ideas for finding, developing, retaining, and engaging talent at all levels.

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