Lean Operations in a Downturn

Coming off of a period of tremendous growth and high asset valuations, our industry is facing economic headwinds.? As the economy slows, the transportation businesses that helped facilitate unprecedented commerce, while navigating significant supply-chain congestion, through the post-COVID period, are now facing a new reality of declining volumes.

Transportation businesses, like many others, ramped up capacity and capabilities during COVID by any and all means necessary, spending significant capital to do so.? Most transportation businesses are now encumbered by very high operating leverage, or the ratio of fixed costs to total costs.? When volume increases above a certain threshold utilization, profits pour in; however, in a contraction, volume below a certain capacity utilization threshold can cause a business to bleed out in a short period of time.??

Cost rationalization will be the theme for 2023, and those who aggressively re-plan operations, resources, and finances will survive.? Those who are not already thinking about this are late to the game.? The question for ownership/management is what to do?? The most effective means of diagnosing a complicated medical case is by leveraging a multidisciplinary triage team comprised of the most experienced experts available.? The year 2023 (and maybe beyond) is analogous to a complex medical case.? Ownership and management needs a solid team of multidisciplinary professionals to help diagnose the patient, determine the best path forward, and operate.

P5 Solutions is just that sort of team with the right experience (https://www.p5sol.com/our-team), and is helping customers deal with the current, fast-changing environment.? Whether the need is capacity rationalization, cost reduction, investment optimization, business de-risking, or other, our experienced team of professionals is well-suited to help develop a robust, comprehensive, and methodical turnaround plan to unlock/maintain value through tumultuous times.? We’re operators, not theorists, and we can provide the right business recommendations that you can act on.? Reach out, and we'll determine how P5 could help you improve your business.

contact: Peter Lindeback at [email protected] or 908.656.1339