Sep 24, 2020
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Tariffs And A Turkish Coup – How Manufacturers Win In The Face Of Uncertainty

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By Cameron Welter | Principal at Kotter To my mother s chagrin I spent the summer and fall of 2016 flying in and out of eastern Europe. I found myself on one of the first flights into Istanbul after the coup and then in Kiev as war raged a few hundred miles south inside the Crimean peninsula

 

What initially took me to that part of the world was a project with a producing company seeking to adapt to their rapidly changing market – smaller companies were sprouting up and customer preferences were changing faster than our client could change their production lines. As I became used to the nervous texts from home working with my client in this churning market I became more aware than ever of what change really means to organizations

 

The abstract notion of exponential change become very real inside the face of regional volatility conflict and global uncertainty. Fast forward a few years: I was sitting at a hotel bar in Texas after I saw BREAKING NEWS flash around the screen. What followed was the 1st announcement that steel and aluminum tariffs will be imposed on imports

 

This time I was working with a heavy manufacturer that served gas and oil exploration. Over the last four years they’d watched their revenue ride an unpredictable roller coaster – dropping by almost half as the market for exploration investment fell out only to u-turn and rebound to near market highs

 

Would this announcement force another contraction just as their people were recovering from the former round of layoffs and short staffing? How could they smoothly ride the dramatic ebbs and flows admired and use the turmoil to beat out their competitors? (Spoiler alert – they did. ) At Kotter we help organizations accelerate their strategy execution

 

These experiences lend us some insight into what it takes for manufacturers to win inside the era of exponential change. Power dominates but speed overwhelms the competition PROMOTED Deloitte BRANDVOICE | Paid Program
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No Putting A Person Of Color On Your Panel Doesn t Accomplish Diversity Billion-dollar capital investments require massive production volumes and throughput to maintain a facility competitive

 

But what happens when your lines – and your decision-making – can t stay alongside of your customers who are making real-time decisions about their immediate needs and your product takes months to produce? Like many manufacturers to accelerate change our client embraced the teaching of Eliyahu Goldratt in The Goal (one of my favorite business books not written by John Kotter)

 

They hyper-focused on throughput constraints and decreasing their batch sizes to drive down inventories. The rate enabled by this mindset provided tangible benefits to customers in addition a gap line to a much bigger conversation on how our client could provide even more value. Many of us (including yours truly) take solace in our ability to reserve everything from dish soap to Christmas presents on Amazon and have them in-hand two days later

 

Our ability to plot in such tight intervals allows us to focus our own time attention and money elsewhere. To win in manufacturing companies are striving to bring an Amazon-like experience to goods produced by the ton – and make money while they shorten lead times and reduce batch sizes. Speed overwhelms the competition but customer intimacy is lethal Moreover investing in tighter operations our client also pondered another question – how will we shift from a product-driven organization to 1 that provides high-value services as well? To move in this direction our client realized that they would want significantly deeper insights into their customers businesses

 

To kick-start this variation they piloted a brand new service model and positioned someone at customer sites for several weeks to become familiar with their customers businesses. Sitting on site enabled our client to get a far deeper level of understanding in their customers experience – what were the daily frustrations which may be eliminated? Details as seemingly insignificant as label placement suddenly became major throughput constraints for the client when labels were being scanned by the thousand! To move into this new future manufacturers need to engage everyone – from technical sales to operators – in building an unrivaled degree of customer awareness

 

Focusing on internal constraints is a proven solution to succeeding but winning in the future will require manufacturers to support their customers efforts to do the same. Customer intimacy is lethal and so is agility Over the last several years agility has gone from being a company buzzword to the singular focus of executives everywhere

 

However the notion of agility feels irrelevant (or at least unattainable) when your enterprise makes money in facilities whose footprints are measured in football fields. Manufacturers that win in the future would be agile in their ability to move quickly to make decisions but more importantly would be designed to function at full capacity someday and shut down the next ever poised for the next inevitable upswing

 

An agile organization could make fast decisions but a pliable one could rise from the ashes time and time again. As Turkey lurched in an economic crisis – companies (our client included) found themselves facing an uncertain future. However in this uncertainty our client spotted a discreet moment of opportunity to purchase other assets at a coupon – which is strictly what they did

 

As markets rebound cheaply purchased assets and a capability to staff up quickly pay dividends as overly bureaucratic and slow-moving organizations stumble off the starting blocks. Manufacturing outfits are incredibly difficult businesses to run and a good tougher industry to compete in. How are your facilities poised to win inside the face of uncertainty? Whether it s a looming trade war or an actual war there is always a firm that makes it throughout the volatility better positioned available in the market than they were

 

Are you ready for the uncertainty your organization is facing – or will you be another facility scrabbling to catch up to the changing times?

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