It's time to circle the supply chain wagons: Should you start by cutting costs or cutting revenue?
"To make smart cuts to your supply chain, you should first understand which elements represent the core of your business," said Burkitt. "Which customers are the most profitable and which are expendable? Which products do customers truly care about and which are just window dressing? What level of service quality do key customers need and expect?
"Ironically, the best way to start cutting costs may be to start cutting revenue -- specifically the 'bad' revenue that undermines profitability. Decide which revenue streams are not worth preserving and then target cost reductions," said Burkitt.
The idea of cutting revenue in a downturn might seem crazy, but simply put, some customers are not worth serving and some products are not worth selling. The shrinking margins that accompany an economic slowdown often only make the problem worse. Executives need to use top-down revenue cutting and bottom-up cost cutting approaches.
2019 Gold & Silver Shovel Awards: Recipients Garnered Large Job-Creating and Investment Projects in Diverse Industries
2018 Top States for Doing Business: Georgia Ranks #1 Fifth Year in a Row
33rd Annual Corporate Survey & the 15th Annual Consultants Survey
2018 Leading Metro Locations: Pacific and Mountain Metros Dominate the List
What Makes a Successful Innovation District?
A Changing Food Manufacturing Industry
2017 Food Processing