A company can quickly be thrown off track by events beyond its control, especially in difficult economic times. All businesses experience it, even those in the manufacturing sector, which is the backbone of the world economy. With consideration, manufacturers and other sorts of enterprises must improve their business resilience or risk being eliminated from the competition.
Planning and preparedness are necessary to build business resilience, including:
Examine Expenses and Assets
Planning is necessary to build resilience in business – especially before an economic downturn occurs. Before planning, business must analyze the expenses and assets should come first. Several questions businesses could consider may include: what essential assets must be protected in a recession? What expenses can be reduced to help the companies keep running during those times? When recessions do happen, execute the plan.
Cash Flow and Investment
Working on business resilience means that companies pay more attention to cash flow and investment. It should aim at increasing cash flow, more than just profit and loss. Invest wisely; choose the type of investment that offers the highest return. Investments should be widely diversified to maximize the benefit. When the recession hits, the companies will be able to use the reserve profits from cash flow and investment.
Incorporating New Technologies
The economic downturn affects every single business out there. The economy would recover sooner or later, and the companies needed to be prepared by incorporating new technology to help with future operations.
Start by identifying the technology that will be indispensable for the company in the next five to ten years.
This is part of the investment that needs to be made before the recession happens. AI, or artificial intelligence, is part of the new technology that helps greatly in building business resilience. AI helps with supply chain resilience in manufacturing through:
- Streamlining work capital to increase customer service level and speed, which will lessen the cost.
- Optimization and cost savings for the transportation and logistics area.
- Improve accuracy for planning and forecasting to optimize the manufacturing process, and more.
Enhance the Business System
Building business resilience is more than just being able to withstand an economic downturn; it is also how businesses recover after one. Businesses that are working on improving their systems and capabilities are better prepared to deal with economic issues. Companies must assess and change their business systems to improve them. Take a look at these factors:
- System automation to improve business speed and accuracy
- Working on ways to create profitable growth
- Increasing collaboration between all parties involved
- Enabling a supportive and agile infrastructure
- Reducing dependence on individuals
Creating a Flexible Manufacturing Model
The ongoing Covid pandemic raises awareness about the importance of creating flexible manufacturing models to anticipate a similar issue in the future. Digital capabilities and transformation are a must, in this case, provided the manufacturers are equipped with the resilience and flexibility needed to stay mobile during hard times. An automated and remotely operated factory is an example of a flexible manufacturing model that should be taken into consideration.
Resilient Supply Chain
Resilient supply chains are crucial, and manufacturers need to establish them as part of building business resilience. Manufacturers must keep their risk assessments and remediation plans up to date regularly. Building stronger supplier collaboration helps reinforce the supply chain ecosystem. Technology plays a huge part in improving the health, safety, and efficiency of everyone involved.
A recession or economic downturn could happen at any time, and it is hard to predict when. The fluctuating economic state may provoke devastating effects on everyone, including manufacturers and businesses around the globe. Working on building business resilience will help to slow down its negative effect on the business, as it builds reassurance that you will be able to bounce back and recover in no time.