CG Survival Guide: Five Ways to Outlive the Recession
Dec. 17, 2008 - Historically, the consumer goods industry has been positioned to stay afloat in hard financial times -- after all, consumers still need to eat, drink and maintain at least some level of personal hygiene. But this time around, we've seen a number of peer companies forced to close facilities and eliminate jobs in order to stay afloat -- Pilgrim's Pride, Stanley Works and Hanesbrands come to mind. Here, CGT's Research Advisory Board members offer survival tips on how to make the most out of a bad situation and, hopefully, come out of this recession on top:
Survival Tip #1: Stay Innovative
The chaos gripping most markets today creates vast new opportunities for those bold enough to pursue. If your competitors are curtailing product development efforts, and you keep going without a pause, your efforts just gained expected future value. As you continue to invest in pipeline work, your competitors' pipelines dry up. -- Cheryl Perkins, Innovationedge
Survival Tip #2: Make Every Dollar Spent on Trade Promotions Count
The average consumer products company in 2008 will spend 14 percent of revenue on trade promotions, but only 54 percent are evaluated. Ask for monthly accounting of trade promotion effectiveness. Go beyond its traditional definition of only measuring the increases in volume push to understand the effect of trade funds on margin. Require an investment in technology and processes to ensure your company has the capabilities to measure baseline lift and trade promotion effects. -- Lora Cecere, AMR Research
Survival Tip #3: Make Better Use of your Intellectual Capital
Manufacturers will look for ways to make better use of knowledge management tools for knowledge retention and sharing as they lose workers with best practice expertise to economy related layoffs and early retirement offers. Manufacturers that maximize their intellectual capital will create an advantage over those manufacturers that fail to act similarly. Exploit your existing tangible and, especially, intangible supply chain assets, such as brand name, trust capital, and information equity. -- Kimberly Knickle and Simon Ellis, Manufacturing Insights, an IDC company
Survival Tip #4: Fire your Bad Customers
Now more than ever is the time to clean up underperforming customers. Of course, accurate customer P&Ls are a prerequisite, but now is the time to have the courage to disengage from those customers that are the "drain on your organization" and focus on the true value added business partners. Even if revenues take a bit of hit, it is not nearly as much of a penalty right now. -- Thomas Bornemann, Clarkston Consulting
Survival Tip #5: Use a Budgeting Process to Evaluate Top Talent
Use the increased emphasis on budgeting to evaluate the critical thinking, judgment and communication skills of your top talent. Anyone can develop a budget recommendation that has identified waste and intelligently cut costs, but your top talent will have made thoughtful decisions regarding capital spending, modeled the risks and prioritized recommendations based on what will be most important when the current situation changes for the better. -- Richard Essigs, IBM Corporation
Visit www.consumergoods.com next week to read Part 2 of this series, and learn five more tips that you can incorporate into your recession survival plan.
Survival Tip #1: Stay Innovative
The chaos gripping most markets today creates vast new opportunities for those bold enough to pursue. If your competitors are curtailing product development efforts, and you keep going without a pause, your efforts just gained expected future value. As you continue to invest in pipeline work, your competitors' pipelines dry up. -- Cheryl Perkins, Innovationedge
Survival Tip #2: Make Every Dollar Spent on Trade Promotions Count
The average consumer products company in 2008 will spend 14 percent of revenue on trade promotions, but only 54 percent are evaluated. Ask for monthly accounting of trade promotion effectiveness. Go beyond its traditional definition of only measuring the increases in volume push to understand the effect of trade funds on margin. Require an investment in technology and processes to ensure your company has the capabilities to measure baseline lift and trade promotion effects. -- Lora Cecere, AMR Research
Survival Tip #3: Make Better Use of your Intellectual Capital
Manufacturers will look for ways to make better use of knowledge management tools for knowledge retention and sharing as they lose workers with best practice expertise to economy related layoffs and early retirement offers. Manufacturers that maximize their intellectual capital will create an advantage over those manufacturers that fail to act similarly. Exploit your existing tangible and, especially, intangible supply chain assets, such as brand name, trust capital, and information equity. -- Kimberly Knickle and Simon Ellis, Manufacturing Insights, an IDC company
Survival Tip #4: Fire your Bad Customers
Now more than ever is the time to clean up underperforming customers. Of course, accurate customer P&Ls are a prerequisite, but now is the time to have the courage to disengage from those customers that are the "drain on your organization" and focus on the true value added business partners. Even if revenues take a bit of hit, it is not nearly as much of a penalty right now. -- Thomas Bornemann, Clarkston Consulting
Survival Tip #5: Use a Budgeting Process to Evaluate Top Talent
Use the increased emphasis on budgeting to evaluate the critical thinking, judgment and communication skills of your top talent. Anyone can develop a budget recommendation that has identified waste and intelligently cut costs, but your top talent will have made thoughtful decisions regarding capital spending, modeled the risks and prioritized recommendations based on what will be most important when the current situation changes for the better. -- Richard Essigs, IBM Corporation
Visit www.consumergoods.com next week to read Part 2 of this series, and learn five more tips that you can incorporate into your recession survival plan.