Managing operations during crisis

Ever since the financial crisis started to spread around the world, organisations heavily focused on business efficiency – reducing costs, improving operations and making the best use of assets.

Nowadays, of a more stringent nature than before, many companies realised that they should know how their costs compare to other companies on the market, how operations could maintain efficiency and what opportunities there are to maintain profit.

Here are a few tips on how companies could manage operations during crisis:

  • Assess the pros and cons for your business and consider outsourcing if this lets you focus on your core business efficiency;
  • Reduce costs through the use of shared service centres;
  • Eliminate the activities that do not add value to company business;
  • Optimise the supply chain (if applicable) to reduce the procurement cost as well as the cost of supply to customers;
  • Analyse the benefits and risks of your optimizing decisions, in both internal processes and external relationships with customers and suppliers.

If you haven’t done it already within your own company culture, now is the perfect time for organisational redesign and working capital reduction. Moreover, as a „lesson learned”, consider maintaining a culture of continuous cost containment, even after the financial crises fades away, rather than damaging the business through periodic cost-cutting intercession.

As a result of the actions above, you may gain a clear picture of your company’s cost drivers and address cost efficient and sustainable improvements. Your focus on people and cultural issues, as well as on processes, structures and technology, could ensure that performance is managed during crisis.

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4 thoughts on “Managing operations during crisis”

  1. I like this:

    Your focus on people and cultural issues, as well as on processes, structures and technology, could ensure that performance is managed during crisis.

    Have you seen the Rouibini/Taleb meet CNBC interview? Interesting stuff.

    Karenne

    1. Yes, interesting indeed:
      http://www.cnbc.com/id/15840232?video=1027496846&play=1 for anyone interested.

      I must disagree with CNBC insisting on referring to Roubini and Taleb as “Doctor Doom” and “The Black Swan”. As for expressed opinions, I agree with Roubini that a bottom might come sometime in 2010 but in terms of price I think there is going to be more than another 20% down from here.

      Thanks for your post.

      Liviu

  2. Yup!

    Although I suspect the bottom will happen earlier and “predict” a crash of the (a) credit card companies by end year.

    Silly journalists – they really made themselves look like they have no idea of what’s happening in the economy or how learned R and T are.

    Still, the video was entertaining.

    Have you read the Black Swan?

    1. The main idea in Taleb’s book is to build robustness to the negative events, while being able to capture positive ones. This is the basis of risk management and a strong internal controls environment and, actually, the trend internal audit is taking.

      I’m currently writing an article on internal audit trends and this is one of the main ideas: risk and controls are no longer seen as of technical domain solely but management itself tends to take ownership of risk and ensure the effectiveness of controls designed to mitigate it.

      I also agree with Taleb’s argument that causation is primarily based on the limits of experience and, consequently, on the limitations of scientific knowledge. The “truth” behind science is limited to certain areas and in many cases having an academic degree is irrelevant.

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