Fall 2009 issue of Horizons

INDUSTRY u MANUFACTURING & DISTRIBUTION

Continuous Improvement in Troubled Economic Times

• Consider shorter work shifts or reduced work weeks 2. Show that everyone is making sacrifices during the economic downturn. • Consider requiring all employees, including administrative and management positions, to take unpaid leave or furloughs. • Look closely at discretionary spending — particularly at the management level. 3. Carry on with your continuous improvement projects. • As the pace of work slows — now is the perfect time for team members to improve efficiency in your operations. • Introduce the continuous improvement culture to other areas of your business outside of operations, such as finance, marketing and human resources. • Improvements to processes now will provide your company with a competitive advantage once the economy recovers. 4. Communicate! Communicate! Communicate! • Be thoughtful about how you implement your cost reduction program. • Explain the cost reduction program carefully and more than one time to team members. • Communicate the cost reduction plan personally and from the top! During an economic downturn, it is important to balance financial responsibility with the commitment to your team members. All the years spent creating an environment of continuous improvement can be washed away with a poorly communicated mass layoff. It is important to find creative ways to maintain financial viability without disrupting your most valuable asset — your people!

By Mike Lewis, CPA

Are you looking for ways to spend your excess cash? For most manufacturing and distribution companies, cost-cutting strategies are front and center, and there is little if any excess cash. The worst economic conditions since the great depression have led to significant declines in revenue. This economic crisis, coupled with the inability to obtain working capital, has forced many companies to make difficult cost- cutting decisions, including employee layoffs. It is a particularly challenging time for those companies that have made a commitment to lean principles and continuous improvement. One of the keys to maintaining a continuous improve- ment culture is a commitment to the organization’s team members. This commitment is in conflict with the need to cut costs for many companies that are experiencing significant declines in market demand and top-line revenue. Here are some things to think about before implementing layoffs at your business: 1. Look for ways to reduce employee costs without eliminating full-time employees. • Eliminate all temporary workers • Eliminate profit-sharing contributions or

Questions? Contact:

Mike Lewis, CPA Partner-in-Charge Manufacturing and Distribution Services Group 314.290.3391 mike.lewis@rubinbrown.com

company matches • Eliminate overtime

35 u fall 2009 issue