4 Ways to Increase Resilience Amid a Shrinking Economy
Posted on 16th February 2024 at 15:26
The UK manufacturing industry contracted in December 2023, and sector optimism slid to a 12-month low, according
to intelligence solutions company S&P Global. Specifically, S&P Global’s manufacturing purchasing managers index
weakened to 46.2 in December, the 17th consecutive month it fell below 50—the threshold for growth. To make
matters worse, the Bank of England reported there is a 50-50 chance of a recession by spring. Therefore,
organisations must scrutinise ways to remain resilient, with economic uncertainty likely to hamper demand.
Employers should consider the following strategies:
• Reduce waste. The National Association of Manufacturers found that more than a third of manufacturers
(38.5%) cite rising raw material costs as their main business concern. To prevent costly materials from being
discarded, organisations should conduct a waste reduction audit. Specifically, employers should identify
waste sources (eg overproduction, inefficient processes and excess packaging) and take steps to remedy any
problem areas found. Ideally, organisations should nurture a continuous culture of improvement whereby
manufacturing processes are regularly reviewed to spot improvement opportunities.
• Streamline operations. Organisations should consider the merits of lean manufacturing—a methodology
that focuses on improving efficiency, reducing resources and minimising steps that don’t add value. It’s
particularly important to identify bottlenecks and conduct inline quality checks; this way, issues are caught
early, saving employees from doing non-value-added work further down the production line.
• Invest in technology. Spending money during a shrinking economy may seem counterproductive; however,
smart investments now could help organisations recover quickly once economic uncertainty lifts. Investing in
pertinent new and emerging technologies could aid recovery and fuel growth in the future.
• Manage liquidity. Organisations should control overhead expenses, consider selling unnecessary assets and
prioritise investments that offer the best return to increase cash flow and boost resilience.
Contact us today for further risk mitigation guidance.
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