The 2020 Mid-Year Economic Update_long

An Unintended Consequence of Lean

For years, lean has been a hot topic among manufacturers as a way to streamline businesses, operate more efficiently and cut costs.
 
But now that the recession is in full swing and uncertainty about the end looms, companies who have gone lean are facing an unintended consequence of that course of action: With a workforce that has already been trimmed and specially trained, where can you cut to save money?
 
Broad-based layoffs aren't an option in those situations, according to a recent article at WSJ.com (read the full article here). Companies like Parker Hannifin have been trying to make cuts in other ways - such as reducing hours or cutting pay - but that may ...

For years, lean has been a hot topic among manufacturers as a way to streamline businesses, operate more efficiently and cut costs.
 
But now that the recession is in full swing and uncertainty about the end looms, companies who have gone lean are facing an unintended consequence of that course of action: With a workforce that has already been trimmed and specially trained, where can you cut to save money?
 
Broad-based layoffs aren’t an option in those situations, according to a recent article at WSJ.com (read the full article here). Companies like Parker Hannifin have been trying to make cuts in other ways – such as reducing hours or cutting pay – but that may not work in the long run, Parker’s CEO Donald Washkewicz said in the article. In the 1980s, workers felt the strain after three months of reduced hours and pay; at that time the company decided it had to take more drastic action and laid off workers and brought some back to full-time.
 
Now, due to lean, even small cuts in the work force could have a big impact, as more efficient production makes each worker responsible for more.
 
Of course, getting lean in good times means that fewer jobs need to be cut in bad. Still, Parker-Hannifin is seeing enough of a strain that it has had to look to other areas for savings, including pared down inventories, improved technology and salary freezes.
 
Lean is still an option; in fact, now may be a great time for companies who haven’t implemented such a plan to improve efficiencies. But, it’s likely that current conditions will require your company to consider a combination of lean and other cost cutting measures, as well.
 
Related articles from MDM:
Strategies for Surviving the Recession
A Distributor’s Lessons Learned On Lean

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