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Home » News » Industry news » The Self-help Strategy of the Manufacturing Industry Under the Epidemic

The Self-help Strategy of the Manufacturing Industry Under the Epidemic

Views:0     Author:Site Editor     Publish Time: 2020-06-20      Origin:Site

There is no doubt that the epidemic will have a major impact on the economy. This huge external event strongly impacted all walks of life.

Many people are concerned about the impact of the epidemic on the service industry, which is the most obvious in the short term. But in the medium term, the risk of manufacturing is greater. The impact facing the manufacturing industry is not the same as the service industry.

The carrier of the service industry is human beings. During the epidemic, services cannot be provided and transactions are stalled. However, once the epidemic is over, it can be resumed immediately. The carrier of the manufacturing industry is goods. In the short term, the previous inventory can last for a while, but because of the shutdown during the epidemic, it will not be able to produce, and it will bring about a period of out of stock, and the out of stock will bring about the migration of customers and suppliers. The impact is relatively large.

Must pay attention. Under the epidemic, the impact on the manufacturing industry is not only the sales link of the sales end, but many problems may arise from the production link. How to do?

 In response to this problem, I specifically consulted Huang Zhiguo. He has been in the manufacturing industry for a long time. He joined Midea in 1998. He is also the founder of the former Midea Academy and a member of the management committee of Midea Small Appliance Group. He is a practical school with both management practice and theoretical level. He has been in the past few years.

 As a management consultant for many manufacturing enterprises. How should manufacturing industries, especially small and medium-sized manufacturing industries, "save lives, cure diseases and maintain health"?

 


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 1 

Saving

To save your life is to live. Once blood loss occurs, the key is to stop bleeding immediately, not left analysis but right analysis but no conclusion. What now, immediately, immediately? Can you save your life? For manufacturing, if employees and suppliers are gone, they may die soon. So within the enterprise, you can do these things immediately: first statistically analyze the employee's arrival. This is probably the most important thing. If there are many employees from Hubei and Wuhan, there must be a plan.

 

And if this involves key personnel of the enterprise, more attention should be paid. Is it to immediately start other recruitment to recruit, or to adjust internal production operations? Can't wait, it's time to start. Second, measure the impact of delayed start and stoppage. What is estimated? One is the possible impact of the extended holiday, and the other is the possible impact of the continued suspension of trade unions. The focus here is on costs and order delivery. The cost should be considered how to control, and the order should be assessed and sorted out.

 

There are special circumstances that must be communicated with customers to delay delivery to avoid additional risks caused by violation of commercial terms. Teacher Huang Zhiguo also specifically suggested that a full-scale stress test should be done, including short-term and medium-term, and forecasting on the premise of sales decline. For example: How about cash flow? How is the sales cycle? What about cost changes? What about changes in profit margins? and many more.

Why should I do this? Because once the sales decline and the costs and expenses cannot be controlled, it is extremely dangerous for the enterprise. Teacher Huang Zhiguo and I said that in their tests, if sales fell by 5% or 10%, and if costs and expenses could not be controlled or even increased, the impact on corporate profits would be a cliff-like decline! Once the cash flow goes wrong at the same time, the consequences will be catastrophic! Finally, in this special period, a particularly important suggestion is to dare to break the wrist of the strong man. Dare to suspend or even cut down losses or projects that need long-term cultivation, and reduce or suspend fixed asset investment that has nothing to do with improving efficiency. A strong man's broken wrist will hurt, but life is more important. One thing is to control costs, reduce investment, and ensure cash flow.

 

What about the supply side? What things should be done immediately? Similarly, first check whether there are suppliers in key epidemic areas (or suppliers' suppliers are in key epidemic areas). This will have the most direct impact on the enterprise's supply chain, and there must be an alternative immediately. At the same time, speed up the procurement planning process optimization. If the restorative growth is achieved in the next 9 months, 10 months or the second half (according to the situation of the epidemic), it requires enterprises to have faster supply chain management, otherwise even if there is an opportunity at that time, the internal operation efficiency is low Enterprises can't catch it.

 

 For many small and medium-sized manufacturing industries, it is necessary to adjust production in a timely manner according to front-end sales, and to reduce production capacity and inventory. At this point, it is better not to produce or to change inventory after production. Teacher Huang Zhiguo also mentioned a very important point, which is to negotiate with suppliers to form a community of destiny. For example, give certain space in material confirmation, warehousing, payment cycle, etc. to improve the pressure of cash flow as much as possible. These methods and means that can save lives should be done immediately, the sooner the better. Fate first.



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                         2 

Curing

Employees and suppliers are the source and destiny of the manufacturing industry. However, for the manufacturing industry, the source is controlled, andthe goods can only flow out before the money can flow back. This is healing. Healing is just getting better. The key to clogged blood vessels is to install stent, not less this or that. On the sales side, how to do it?

First conduct a comprehensive and detailed sales inventory, focusing on these aspects:

Evaluate the degree of overlap between the sales area and the "epidemic area". The greater the degree of overlap, the greater the risk and pressure, and adjustments should be made quickly; external sales channels should be evaluated, and those affected should be adjusted; the sales rate of commodities should be evaluated, and the product price increase rate should be adjusted. At this time, the higher the markup rate of the product, the slower the sales will be realized and the more inventory will accumulate; pay attention to the inventory, if the inventory exceeds a certain limit, it should be quickly cleared (discounted, bought out, it is best to donate more...) ;

On the sales side, during the risk period, we must dare to adjust the channel structure, unless it is directly beneficial to the industry, we must have long-term preparations, and we must not expect to recover in the short term. Therefore, in general, a contraction strategy should be adopted to adjust channels and stores in an unsatisfactory manner in the early stage, and stop bleeding to stop bleeding. Rather, it is necessary to have less sales than profit. As long as the ability is there, when the environment improves, it will recover quickly.

The contraction strategy is "throttling". Is there any way to "open source"? If possible, focus on two aspects: First, the B-end market. Under the epidemic situation, it is obvious that the C-end market is affected, and it is difficult to recover quickly in the short term. Even if the epidemic situation is controlled as planned, it is optimistic that the comprehensive and normal recovery of business flow may be obtained after May.

Therefore, in this case, the B-end market is relatively easy to operate (although the demand for the B-end may also be affected), and enterprises can exert efforts such as the engineering market, enterprise market, group purchase market, etc. Second, online sales. Needless to say about this. Online to offline, the degree of impact will be much smaller.

In order to get the goods out faster and keep the money back, some temporary changes can also be made within the organization. In some projects within the enterprise, internal entrepreneurship, contract system, full-person marketing can be considered to activate the organization and share risks. I believe that "people have wisdom and power" and encourage many ways to find a way out. At this time, with our own employees, we will overcome difficulties and overcome difficulties together. Our task should be to level the land, not to worry about time.

 

 3 

Preserving

Regimen is to make the body healthier. Today's article focuses on saving lives and curing diseases, saving lives and curing diseases. But just as the most certain thing to fight against an epidemic is to maintain good health and improve immunity, companies must only continue to improve their business capabilities to be more resistant to risks. Teacher Huang Zhiguo often said "to deal with external uncertainty with internal certainty", which sounds more meaningful at this time. How to keep in good health?

 

If you have the power, you can proceed in these three areas:

First, product transformation or upgrade. In this epidemic, the relatively favorable industry is medicine and health. If there are customers in this area, there are favorable factors that can strengthen the work in this area. Because of this epidemic, consumers also pay more attention to health and safety and continue it. Companies can consider how to add health attributes to their products and strengthen corresponding research and development.

 

Second, improve operating efficiency. The epidemic will not affect the general trend of China's economy as a whole, so it is more about competition and shuffling. This is also a node that forces companies to transform. You can evaluate the internal operating efficiency in all aspects, and truly look at your company's operating capabilities and efficiency. For example: per capita sales, per capita profit, inventory turnover, cash cycle, as well as organizational structure, number of cadres, etc. The efficiency of human resources in various industries in China is not high, and the pressure on labor costs is very high. This situation must be changed. Manufacturing companies must continuously promote fewer people, automation, informatization, and intelligence in order to continuously improve their competitiveness. Efficiency is the key to hedging business risks. In the past, many companies did not pay attention to these data and did not pay attention to business efficiency. During the risk period, the inefficient companies will be the first to go out.

 

Third, optimize management, especially cadre management. This is ignored by many companies. Combining the epidemic situation and the impact of various aspects, enterprises should also learn from cadre management. We must ensure the professionalism of the cadre team and remove bureaucracy.

This is also very important for excellent companies such as Midea, Huawei, and Ali. Internally, cadres cannot be complacent because they have been working for a long time, their positions have become higher, and the market has been completed, they have forgotten to learn and think, and they have forgotten about competition. We must be "willing to be an officer, be able to be an officer, and do something", and "do not forget the original intention and remember the mission", always persist in the struggle, and truly become the mainstay of the enterprise. The epidemic is not only an infection of people, but also a test of corporate immunity. After saving lives and treating diseases, we must pay more attention to our long-term health. Otherwise, next time, not only vomiting and diarrhea, but also more likely to die.

 

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In the End

 

Overall, this situation is unusual and requires companies to pay more attention. Enterprises must systematically pay attention to the basic skills of planning, budgeting, execution, inspection, etc., make the accounts clear, make plans, and then move, check everything, and form a closed loop. In terms of specific actions, we must simplify the internal management structure, reduce various costs, speed up operational efficiency and respond to the market. 


Now, companies may need to reformulate the operating budget for 2020, and the focus is on the second, third, and fourth quarters, and even several budget plans. Make more detailed calculations through the budget, find out the risk points, and focus on deployment. Prepare in advance and respond flexibly according to the actual situation during the operation.


Our enterprises are all practicing basic skills and coping well. That is the best duty, the best patriotism, the best politics, and the basic guarantee for the Chinese economy to continue to advance. Finally, I would like to thank Teacher Huang Zhiguo for his suggestions. I think these suggestions are of reference not only to the manufacturing industry, but also to all walks of life. I hope the epidemic will end as soon as possible, and I hope that all enterprises can survive it.


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