Tariffs might be temporary, but if your costs are low enough, why worry? Adversity and conflict breed opportunity. You can beat tariffs by lowering costs, and being even more competitive when they are reduced. You can cut costs and come closer to levelling the playing field with those imposing the tariffs.
Don’t just slash budgets. That’s not smart. Change what causes the spending, and you will be even more competitive when cooler heads prevail overseas, and tariffs come down.
How?
Even lean operations have a hidden pile of money waiting to be saved. Most businesses (and certainly their accountants) think maintenance is just a necessary evil. That’s not really true. While many can see that it is an area of high spending, they seldom understand why, nor how much of that spending is avoidable. We routinely save our clients 20% and more of their maintenance budgets. The cost of doing that is low and usually repaid well within the first year.
A lot of money is wasted doing the wrong maintenance, and doing it inefficiently. The results are higher costs and lower levels of output. By doing the right maintenance, the right way, and at the right time, we can lower costs and increase output. Cost per unit sold goes down, margin goes up, tariffs will matter less.
Have you ever had to rush parts in for a repair? Have you had breakdowns on equipment you just maintained? Are your spends on overtime and contracting too high? Do equipment breakdowns get used as excuses for missing deadlines or targets? If you answered “yes” to any of those, there’s money on the table.
Read this – you’ll see what I mean.
Where to focus
The underdog can win!
There are two imperatives that require attention, and you can’t just do one, ignoring the other. You need both.
One is the efficiency of work execution. Get that right and maintainer productivity almost doubles. That means that more work can get done with less overtime, fewer contractors, and less hiring!
The second is the effectiveness of what is being done by those maintainers. We know that “an ounce of prevention is worth a pound of cure”. That applies to caring for our physical assets as equally as it does for our health. If you felt sick after taking medicine and didn’t see any long term benefit, you’d stop. So why do we continue to do work that actually causes problems and fails to improve outputs?
Is the effort worth it?
Absolutely! We have worked up a number of “business cases” for doing exactly those two things. They typically show 20% or more reduction in operating costs, and 10 times or more that value in increased revenues. If you can lower your costs by 20% and increase output by 10% do you think you could beat those tariffs?
You can beat tariffs by lowering costs, and probably even more. We can help you see just how much it is worth to your business with an assessment and tailored business case.
