Establishing a flexible innovation agenda for a changing economic environment

07 January 2019

Written by René Hol

Many SME manufacturing industries in Western Europe are facing a challenging question: what the effects of the recent developments on the stock markets will mean for our globally operating company for the medium-term future. For 2019, there are still a lot of good outstanding purchases by customers. How long will this last? Most products delivered by discrete manufacturers are investment goods for their customers. Therefore, the demand for the offered products and services highly depends on the economic developments. Through watching recent purchase managers indexes, we may expect at least a decrease of orders and pressure on prices as of the 2nd half of 2019. How can you prepare yourself optimally for this situation?

For management of manufacturing SMEs, it is worth to consider a redirection of the planned innovation and improvement projects for 2019 and 2020. Today, most companies are in a healthy financial position. In 2019, a substantial budget is freed up for investments but people in the organization are already fully occupied with their regular duties. So, what to do?

Companies can focus on projects with short-term gains to make the company competitive, but also fit and agile for the next economic dip. Disruptive long-term programs can be approached with characteristics of continuous improvement to already benefit from the investment in the short term. Concepts like lean manufacturing and Quick Response Manufacturing can give some useful guidance. It is also important to seriously consider saving cash. Instead of projects with a high cash burning rate on a lot of consultancy effort, management could consider modern, more clever approaches to obtain improvements with less costs.

How to do this? We will discuss on our blog next week.

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