Free money? Yes please?
There are few topics as hotly disputed as the recessions stimulus spending, and the camps will likely never agree on whether spending to invest in growth is better than cutting spending to weather the downturn. One thing is for sure, if you haven’t gotten any money by now, you won’t be getting any “free” stimulus money from the ole budget czars.
This leaves the average company with a grim outlook for the coming years, and more questions than they can find solid answers for. To get a quick grip on the future, it helps to divide companies into the basic stimulus/performance categories, and take it from there. The fortunate companies that have received or will receive government-sponsored stimulus can be divided into the few that will successfully weather the storm, and the many that will fail to provide long-term benefits from the financial bandaid, and will either demand more or collapse in disgrace. The other two groups are companies who will crash or take dramatic beatings during the recession, and the few companies that will seem to ignore the downward trends and will continue to grow.
Having established that we don’t fit in either of the first two categories, we’re left with the final two as our choices, and quite obviously, looking for ways to define ourselves in the final group.
The recession can’t really be avoided, so the main ways to reduce the impact of economic contractions on the bottom line lies in expanding business or reducing costs. Of course, there is a 3rd path of profiting from the recession directly (“recession proofing” books and classes sell like cookies these days), but if you’re not knee-deep in that market already, you probably won’t be breaking new ground anyway.
Indeed, the solution is one that a 5th-grader could come up with. Increasing revenues and reducing costs. Still, some companies do it better than others, so we’ll provide an example which focuses on the AIDC/logistical end of doing business.
Wal-Mart (who else?) is a perfect example of a company that seems to be growing in spite of the downturn while competing retailers are crashing and burning all around it. Circuit City, Steve & Barry’s, and Linens ‘n Things are some of the many top-end names that filed for bankrupcy in 2008, and Goody’s Family Clothing Inc. was purchased out of bankruptcy, restructured, remodelled, and praised for the wonderful work they did. Less than four months later it filed for Chapter 11 again, and was liquidated.
So how is Wal-Mart doing it? How do they stay in such a strong position as if they simply didn’t notice that there’s a full blown crisis on the market? The answer is logistics. Wal-Mart is the undisputed retail champion of logistical process support, and it’s the main weapon they use to drive down purchase and handling costs, which in turn allows them to prop up their revenues by beating competitors on pricing.
Pierre Georget, CEO of GS1 France says on his blog:
From the logistics drawing board to each individual store, operational excellence is at work on all levels of this buying conglomerate. Rigorous procedures, different methods of globalization and an adoption of all technologies capable of contributing to its quality and operational efficiency are the trademarks of the company.
It is Wal-Mart’s unwavering commitment to new technologies that has payed off time and time again in giving it an edge over the competition. Each gain in supply chain productivity is reflected as a reduction in product costs, allowing them to continue to offer an “every day low price”.