March 14, 2008 08:00 ET

MGPS: Manufacturers Struggling to Improve Performance

TORONTO, ONTARIO--(Marketwire - March 14, 2008) - With the current economic climate in terms of the dollar, a possible recession and the threat of re-opening NAFTA, many organizations, particularly those in the struggling automotive and manufacturing sectors, are undertaking comprehensive reviews of their core competencies.

The plans range in scope from tightening expenses in raw materials, to a full organization-wide review of all major functions from supply channels to marketing channels, from capital structures to infrastructure. What is often less clear, particularly with the grandiose plans, is how the reviews will be conducted and to what end. A strategic review without specific goals and objectives is unlikely to yield the desired result: a healthier financial picture.

Big plans don't necessarily result in improvements and, other than a possible but temporary increase in the share price, don't result in increased shareholder value unless tangible and measurable improvements are delivered. While it is essential that organizations make reviews of various strategic initiatives a standard event, it is also imperative that specific goals and measurements be implemented to demonstrate the overall effectiveness of the strategy in question.

Presumably organizations undertake a review of core areas in order to deliver the biggest bang for the buck. With core expenses representing up to 90% of total expenses, it would seem logical to tackle these areas first as well as review all the strategies in place that affect core competencies. However, due to the fact that core competencies are so critical and the strategies in place often complex, the issue is how to improve these areas and deliver meaningful results without negatively impacting the very same areas. Mistakes in these areas can impact operations and/or marketing, which impacts revenue and expenses.

Non-core areas are often overlooked. While clearly not as important as core, non-core areas offer several distinct advantages when it comes to reviewing them. One, they offer the best opportunity to reduce expenses simply by virtue of the fact they are rarely reviewed to any depth. Two, making changes in these areas is unlikely to negatively impact operations, marketing or revenue. Three, they tend to be less complex than core areas and results can be delivered more easily and more rapidly. Four, skills, experience and, especially, results can be transferred to core areas.

By focusing on non-core areas first, an organization can expect to see positive results and develop the necessary skills to tackle the more comprehensive core strategies.

About MGPS

MGPS specializes in reducing non-core expenses. These expenses tend to be indirect, hidden and scattered throughout the organization. MGPS identifies hidden costs and develops and implement efficient processes to drive out unnecessary expenses. The result is increased cash flow and greater profitability.

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