Three strategies to adopt for uncertain economic times
Few people would disagree that we live in difficult and uncertain economic times. According to AMW exhibitor TXM Lean Solutions, this is not the time to stop focusing on improving business performance. Instead, businesses need a renewed focus on Lean and improvement to stay competitive and prepare themselves for recovery when it comes. TXM has identified three areas where businesses can focus to make gains when the financial going is tough.
Reduce lead time
Reducing lead time allows businesses to become more responsive to customer demands, particularly during economic slowdowns when customers have more options. The faster a business can fulfil orders, the more competitive it becomes, whether the economy is up or down.
Shorter lead times also free up cash by reducing the time between spending money on raw materials and receiving payment from customers. A key tactic for reducing lead time is to work with suppliers to shorten order lead times, ultimately lowering your inventory. Start by mapping your end-to-end process using tools like the Manufacturing Agility Process® to identify areas for improvement and develop a plan to reduce lead times.
Increase capacity without capital investment
The risk of investing in fixed capital increases in uncertain times. Therefore, maximising the efficiency of current equipment and facilities is crucial. A Total Productive Maintenance (TPM) program focused on improving Overall Equipment Effectiveness (OEE) can boost capacity without requiring new investments.
Many businesses find their OEE low—sometimes as low as 40%. Increasing OEE from 40% to 50% can result in a 25% increase in available capacity, a significant improvement with no added expense.
Additionally, optimising facility layout can free up space and increase productivity. Using the Facility Layout Development Process can help reorganise your workspace to gain up to 30% more space, contributing to better efficiency and higher output.
Get everyone involved in problem-solving
Cost reduction initiatives are often top-down and can create fear and low employee morale. However, in uncertain times, engaging your team at every level is critical. Encouraging employees to identify inefficiencies and contribute to solving problems can reduce costs while improving morale.
The Lean Daily Leadership Process® offers a framework for involving staff in problem-solving. It combines three key elements:
- Visual Workplace Management, where daily performance metrics are displayed and tracked.
- Daily Stand-Up Meetings, where leaders meet with teams to review performance, celebrate successes, and address problems. These meetings empower teams to use problem-solving tools like Solving Problems Every Day® to identify and address issues.
- Daily Leadership Routines, where leaders follow a structured list of activities to support the team’s continuous improvement.
By engaging your front-line employees, you tap into their intimate knowledge of daily business operations, making it easier to spot and fix inefficiencies. This approach fosters a culture of collaboration and innovation while driving down costs.
Summary
Uncertainty is a pervasive global challenge, and adopting a “wait and see” approach is ineffective. Instead, businesses should leverage Lean thinking to reduce costs and enhance resilience and agility. By optimising lead times, increasing capacity without substantial capital investment, and fostering employee involvement in problem-solving, organisations can navigate uncertainty with confidence and adaptability, regardless of economic conditions.
We invite you to visit Stand MS125 at Australian Manufacturing Week 2025 to discuss your business’s challenges in the coming year and discover how we can support your growth and success.
TXM Lean Solutions
Stand MS125