Do you understand the price of cost savings?

To many executives, cost savings always seems like a good idea. However, you need to understand that cost cutting has its own price

The COVID-19 pandemic and other recent global shocks have taught us a number of lessons, one of which is that executives across the globe have been myopic when making key business decisions. To understand what this means, consider the following scenarios and ask yourself what they have in common as their root cause:

1. In the UK, there have been empty shelves in the wake of Brexit, due in part to a shortage of truck drivers.
2. There has been chaos in airports around the world as the aviation sector was hit by a labor shortage.
3. Carmakers have suffered a shortage of semiconductors as their chip-making suppliers have focused on other industry players as business partners.

What was your initial answer to what these scenarios have in common? Was it that they are having issues in their supply chains? If that was your answer, dig a little deeper before…