As Reuters recently reported in a headline titled “Analysis: US Chief Executives Can’t Break Cost-Cutting Habit”… “More than three years into the recovery, CEOs are still relying on cost cuts to prop up earnings.” The reporters suggest the cuts might not permit businesses to successfully meet demand once it really increases. The quote was pointed out by CEO Abe Eshkenazi in a recent issue of the APICS newsletter.
On the flip side, the newsletter article notes, a lot of companies (including big ones like Coca-Cola and 3M) are planning on increasing demand. The dichotomy highlights the difficulty in balancing one’s supply chain. It is frequently said that you “can’t cut your way to growth” — or similar phrases, implying cost-cutting will carry a company only so far. And it’s true.
While industrial cuts in expenditures show a sharper focus on efficiency, it takes a well-balanced supply chain and a strong emphasis on operational strategy to be truly effective in today’s business environment.
Eshkenazi uses the difference to note that when business picks up again, some firms may simply be ‘too lean’ to fulfill orders. He notes this as a potential ”disconnect between the overall business strategy and supply chain tactics.”
Consider the following definition from the APICS Operations Management Body of Knowledge Framework: “Execution of operations strategy is critical to the execution of the business goals. The business plan typically is focused on financial objectives, market and product objectives, technology, and growth. Operations must align these goals with processes such as speed, flexibility, cost and quality.”
Eshkenazi, CEO of APICS, uses his point to again emphasize how true supply chain professionals have the training, knowledge and understanding to bridge this gap. He notes how holders of APICS’ Certified Supply Chain Professional (CSCP) credential can immediately establish their mastery of supply chain management, and help companies resolve the “Efficiency versus Effectiveness” conundrum.
We align with Eshkenazi, as long-time believers in the benefits of the increased knowledge gained by APICS certificate holders. Our own firm is a long-time supporter and participant in APICS training and certificate programs, particularly the core component certification — CPIM (Certified in Production & Inventory Management).
If you’re involved in manufacturing and/or production planning, and haven’t looked into APICS training, you really should. You can learn more here.
In fact, PSSI is acting as host once again for a new series of CPIM training classes in our facility starting right now! It would not be too late to sign up someone from your firm. As a matter of disclosure, we neither teach nor are we compensated for promoting these classes. We simply believe that after many years of observation that APICS education and training has proven invaluable to so many firms who want their employees sufficiently knowledgeable and empowered to make a meaningful difference in the improvement of their own companies.
You can contact us directly and we’ll put you in touch with the folks who are presenting the new round of CPIM classes… but don’t wait too long. Classes are starting now!