The current state of the country has posed some challenges on companies. At this recession time, every company has to think out of the box and find a way to survive. Since the early part of 2016, companies in Nigeria have been battling with a number of economic issues such as inadequate foreign exchange for importation. This has created serious bottleneck in production and meeting the demand of the customers, though the demand for local raw materials has increase (only for imported raw materials that has local substitute).
Before this time, Nigerian companies have been battling with couple of problems such as poor infrastructure, poor power supply, global competition, product faking, regulations and taxes, etc. Working capital has been seriously depleted and the banks are not giving out loans. The inflation rate has been ridiculous and the devaluation of Nigerian Naira has been alarming. The downturn in the economy has greatly affected all the sectors of the economy and many companies have to shut down operations while others are operating below minimum.
It is important therefore that any company that wants to survive this recession has to come up with new strategies to survive. However, the first area to focus is on company’s cost. Recession calls for cost-cutting, especially those cost we can do away with. These include cost as a result of wastage (double handling). It is not time for re-working products thereby increasing cost of production. Cost of power/energy (for generators fuel) has to be reviewed. Do you need to run all the machines? Do you need to run present machine capacity, though you are not doing the usual volume with it? Do I need I big generator at this point or use smaller generators for small machines, thus less spending on diesel or petrol? These are questions for decision making in respect to efficient power utilization.
The company has to look into costs resulting from high-key lifestyle or luxury. It is an important area to cut down on cost. The number of staff can be reduced since most companies are not doing the usual volume that requires the present number of staff. It is better to have few staff that can be well paid doing the whole job than many staff that the company cannot afford their salary at this point.
The procurement manager needs to do more of research on local substitute/alternatives for some materials since Forex is not even available. He may need to consider other suppliers and see what they can offer. The production manager can equally look out for possible production synergy among production plants.
Another important area to also consider is that of new business idea. Given your current machines and manpower, the company can think of a new product with 60-80% local raw material usage. This will help the company running and paying its fixed cost while sorting out Forex and importation for other products. The new product can be well managed to give room for export, if to the neighbouring countries. This is not a bad idea. Just survive!
Nigeria is going through a phase and will soon pass. However, every company has to figure out how to remain in business before the end of the recession.