Wriggling Out of ‘the Squeeze’

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At some point in the growth cycle of most businesses, they inevitably face “the squeeze”—when increasing complexity starts to overwhelm the business processes and management systems. The business then gets squeezed by rising overhead costs, falling efficiency, capacity constraints, and cash flow challenges. These often combine with poor delivery and quality performance to constrain the growth of the business.

When faced with “the squeeze,” many manufacturing businesses make these same five mistakes, only making their problem worse.

1. Seeing the Solution in Software

Figure 1: Software systems such as ERP systems are essential tools in most businesses. However unless your underlying business processes are under control, implementing software can just make the confusion worse.

Recognizing the confusion in their business and frustrated by a lack of clear visibility into what is going on in their markets, many business leaders seek solutions in software. Usually, this involves ERP software, which is often sold as the “all singing, all dancing” software solution to everything. In fact, software does not fix broken business processes, it just automates them. Therefore if your business processes are not robust then implementing ERP software will most likely make internal confusion worse, meaning that you may just have spent a lot of money automating chaos.

2. Looking for the Superhero

Another common mistake is to look for a brilliant operations manager or general manager who will come in and put everything right. Sometimes, you might get lucky, but usually, “the squeeze” eats managers for lunch. No leader or manager, no matter how good they may be, is a magic bullet solution for more deeply rooted and foundational problems. We know businesses that have changed operations managers 10 times in 10 years. Unless you live in the world of Marvel or DC, there are no such things as superheroes. Soon, you will see your brilliant, highly-paid executive as part of the problem, not part of the solution, and start looking for a new superhero.

To read the entire article, which originally appeared in the August 2024 SMT007 Magazine, click here.