Darren Matthews, Business
Development Analyst for WiseTech Global, explains the importance of having a big-picture mindset.
Financial Crisis hit many companies very hard, but the manufacturing industry
in particular felt the force of the world slipping closer and closer to the
edge. Previous years of sustained growth were suddenly met by production levels
dropping in excess of 75%, and unfortunately, some didn’t survive to tell the
One of the first management reactions to a drop in production is to look
at the company head-count and begin considering reducing staff numbers to bring
better balance to the falling rate of production. This is certainly a logical
approach, as no company owner really wants idle hands on the payroll (crisis or
not), but the shrewd companies looked outside of their micro-environment and
analyzed the bigger picture.
Let’s take a hypothetical look at a producer of electronic components.
This company sells their products to companies that produce consumer
electronics – everything from laptops and TVs to toasters and door bells – then
takes these goods to the retail market where you and I make our purchases. For
years, this company experienced market-leading growth, but suddenly production
fell off a cliff. They were only manufacturing 50% of what they did the year
before. It was a meltdown. Management was smart, though, and realized they were
not the only victim of a global crisis since everyone around them was
experiencing the same troubles.
So how many staff did this company lay off? Zero. Seeing the bigger
picture, management viewed themselves as just one part of the whole, a single cog
turning inside a much larger system.
It’s easy for people to view their own department as the only result
that matters. It’s the same for viewing the performance of a single branch or for
a single company inside a larger enterprise. Indeed, it’s all too easy to look
at your enterprise as a standalone without factoring in the “why’s” from a much
We all sell, operate, succeed and fail inside a supply chain. When we
look at this bigger picture – when we think globally – we see that we are all
linked together. We can rely on these links at times of perceived failure, and
we can succeed when others do.
It’s this point of view – this understanding – that led our hypothetical
electronics company to the decision they made. They analyzed the chain and made
a very important discovery. Sales to the end consumer only dropped by 3%. The
final sale price of these goods might have been discounted, but the items were
leaving the store all the same. Retailers’ natural reaction to recession tends
to be “let’s reduce inventory,” or “sell, but don’t replenish,” or simply “cash
is king.” Yet, our electronics management team knew that when inventory is
sold, it needs to be replenished. The statistics showed that on average,
retailers held stock for four to six months of current sales. They knew that at
some point, they would be required to ramp up production once again. Fire in
January and Hire in May, or maintain the well trained staff you currently have.
To the relief of our hypothetical electronics employees, the staff were
retained, and the company was well positioned to meet demand when it returned.
By thinking globally and analyzing the data, they were able to see the
cause and effect inside the wider ecosystem. Retailers were reducing their
inventory but didn’t stop buying, meaning it was inevitable that demand would
return. Thinking globally allows us to sometimes spot the obvious things that a
local profit and loss report does not really reflect.
Whether inside your own organization, or globally inside a wider ecosystem,
having the information on-hand allows you to take a better look at the world
you live in. Simple yet sophisticated technology solutions can provide you with
a clearer vision of that world. Gaining visibility over your own stock
inventory or that of your clients’, your local and global financial positions,
prospective sales and quotes, margins on won business, the number of shipments
you’re moving, your overseas operations, your potential profits from shipment
files, and even your staff’s productivity, efficiency, and work capacity –
having the right technology solution allows you to shine a light over all of
these to better see the supply chain that links them together.
Information should be at your fingertips any time you need it, and with
the knowledge that you are all linked together in some way, it can enable you
to make a far better appraisal of your current position. In doing so, you can avoid
creating your own crisis along the way.
Darren Matthews is Business Development Analyst for WiseTech Global
Media Contact: Lisa Tree, email@example.com