Tariff talks just another blip on the radar for many Lean Six Sigma companies

If you’ve been following the U.S. business news lately, there are discussions about tariffs with China, and many industries are potentially being disrupted.

Too often, organizations wait for one of these “burning platforms” to hit before they reach out for help with Lean and Six Sigma efficiencies. Some other recent examples include:

• Higher minimum wages
• Loss of a key customer or employee
• Change in tax code
• New competition

This is the worst time to start an improvement program!

The organization will likely be looking for short term results to address the recent issue, and they are vulnerable to making bad decisions that aren’t based on evaluating their processes and investing in the long run.

This short term thinking often leads to decisions like:

• Worker layoffs and job posting cancellations
• Consolidation in organizations (leading to more layoffs)
• Early retirement packages and other incentives to leave the company
• Selling off of assets and parts of the business
• Cuts in employee benefits and perks
• Selling the company
• Cutting “unnecessary” expenses, usually in the following areas
  
  • Research and development
    
  • Employee training and development
  • Employee bonuses
  • Travel
  • Consultants and contract labor

Some of these expenses may actually be determined to be unnecessary, but often they haven’t been evaluated thoroughly, or they are seen as optional or “nice-to-haves,” but can have a negative impact in the long run.

Losing important staff can be detrimental to a company, and often their value is not realized until after they’ve left. This also really hurts morale, as workers know who the key people are in the organization, and they worry they are next on the list.

Too often, companies look at the salary of the person as an expense, and see the layoff of highly paid workers as a quick solution to their financial issues.

In Lean, we should be looking at the staff as an asset to the organization, as their years of experience, network and efficiency tips and tricks cannot be summarized into a dollar amount. 

Ironically, the best time to start a Lean Six Sigma program is when business is going well. Instead, companies that are doing well throw people at the inefficiencies to meet their growing customer demands, and then have to lay them off when times aren’t so good.

When things are good, you can actually invest time in training, work on evaluating your processes, and conduct kaizen events and Six Sigma projects to allow your current resources to handle the increased demands.

Then when the tariffs come to your industry, or a competitor cuts into your market share, or the minimum wage goes up, you are in a much better position to handle the disruption, and aren’t rushed into potentially damaging short term decisions.

Where is your organization?

Are you worried and stressed about external forces impacting your work?

Or are you working on improving your processes to get ahead of the next unknown challenge?

Contact us if you’d like help getting started on your program, before the next external force puts you on the defensive.