Wednesday, March 25, 2009

Managing the Recovery is Just as Important as Managing the Downturn

We are months into this recession and the discussion in now turning from the impending recession, to the impending recovery.

Managing a business during a slow down typically involves cutting costs. Victims of cost-cutting measures include travel, entertainment, benefits, salary increases, new hires, location closures, headcount, R&D, markets, and inventory. Each cost-cutting segment receives close scrutiny and involves managerial resources to evaluate and recommend the most effective means to survive the downturn.

Other businesses may take a different approach. These businesses see opportunity during a downturn to either gain market share through increased penetration and service, or through the acquisition of weaker competitors.

Regardless of the approach, each business must execute an effective strategy that achieves the goal set forth. Equally important, if not more so, is the effectiveness to which a business executes a strategy during an economic recovery. Entering new markets or gaining market share may require increasing headcount or opening new locations. It may also include inventory proliferation or realigning inventory levels to meet new challenges during the recovery.

The development of an effective strategy may also require an investment in business applications. Enterprise Resource Planning applications are perfectly capable of managing transactions (financial, accounting, orders, operations, etc). Where there is often a gap is being able to analyze and gain visibility of the data on an enterprise-wide, or business-segment scale. This type of functionality can be found through a business intelligence solution. Often these solutions can provide insight that was never before possible with prior resources.

Gaining intelligence about the performance of a business can help shape the strategy for either a slowdown or a recovery. The important aspect of this is that building a strategy is part art and science. The art is in the human-based knowledge that can not be quantified. The science is in the data. Being able to construct a strategy based on data is where a tool like business intelligence can play an important role.

Feel free to visit for additional information about inventory optimization and how to effectively reduce inventory while protecting critically high service levels.