|
|
Business, Economics, Education, Entrepreneurs,
Environment, Science and Technology
|
|
|
|
____________________
Morning Column
Five Speed Bumps that Halt Your Company's Profits…and How to Eliminate Them
By Jay Arthur
If you want to be competitive in today's marketplace, you have to do one
main thing: Serve customers ten times faster than you do now. "What?" you
may be thinking. "How is that possible? I'm already too busy and
overworked."
Realize that everyone thinks they're already too busy. Unfortunately, a
large part of people's busy-ness is the fact that they're repeatedly picking
things up (products, parts, paperwork, etc.) and putting them down. In the
process of picking the thing up, you have to remember what you were
originally doing with it and what you need to do next. In the process of
putting it back down, you have to bookmark it somehow so you can continue
working on it later. On top of that you have delays and redundant or
unnecessary processes that slow you down. So while you are indeed very busy,
you're often not productive.
The fact is the slower you are to meet customer demands, the more money
your company is losing. Things like long lead times, slow turnaround times,
unnecessary steps, and sheer carelessness cost you in terms of repeat
business and referrals. So what exactly is causing all the redundancy and
slowness? The five speed bumps of business. Beware of these five things in
your own company so you can reclaim your lost profits.
1. Making products before customers ask for them is expensive.
Granted, if it takes you a long time to make your product, then you may
have to manufacture the product well in advance of customer demand. For most
companies, however, actual production time is minimal. What takes a long
time is the sales process. To save money, make your products right on time.
For example, on average, General Motors has a six month inventory of cars
sitting unsold, eating up both capital and time. Toyota, on the other hand,
only has a three week inventory of cars. Week one is on the floor; week two
is traveling to the car lots; week three is being built. Which company do
you think has better cash flow? You want to get to the point where you can
produce something when a customer wants it, and not a moment before. So stop
overproducing and making big batches of things. You'll be better off making
one or two products that are specific to what people want. Remember: Don't
keep your people busy; keep your products busy.
2. Stocking large amounts of inventory is expensive.
How much inventory do you have sitting on your shelves or in your warehouse
every month? Many people think that large warehouses and fully-stocked
shelves are a good thing. In reality, it's a huge money-waster, because the
carrying costs of inventory are expensive. Not only are you paying people to
make the unused product, but you're also paying for warehouse space, people
to manage the inventory, utilities at the warehouse, etc. The costs quickly
add up. If necessary, close down production for a week so you can use up
some of your inventory. Have the production workers clean the plant or fix
the machinery-anything other than make additional products. Let your
inventory get down to a manageable level that requires less storage space
and therefore less money. Remember: If you don't make it, you don't have to
store it.
3. Unnecessary movement of products is expensive.
When you make too much inventory, you often have to move it around. Whether
you need to rotate the stock so the older items are upfront and newer ones
in back, or you have to find a particular model for a customer, your
warehouse likely has numerous forklift operators moving things back and
forth. Product movement increases your chances of having damaged goods,
which you then must either scrap or rework. Additionally, forklift accidents
increase worker's compensation costs. The less inventory you have stored in
your warehouse, the less movement (and less damage) your products will face.
Remember: If you don't store it, you don't have to move it.
4. Unnecessary movement of people is expensive.
Many people complain about their commute time to work. But how much commute
time are you or your staff doing while at work? For example, do people have
to walk across the office or even to a different area of the building just
to pick up their printouts from a central printer? Are they walking from
workstation to workstation to complete a simple task? In many companies,
commute time while at work can be immense. In fact, it's not uncommon for
people to walk the equivalent of over five miles a day in a 2,400 square
foot space just to do their job. Anytime people are moving too much, you
need to redesign the space. This may mean using a number of smaller printers
rather than one big central printer. Or it may mean bringing workstations
closer together so there's less movement. Think of your work area like a
kitchen, where you have your stove, sink, and refrigerator forming a
triangle. The closer that triangle is together, the less distance the chef
has to travel to prepare a meal. When you can cut down on people's at-work
commute time, you'll see a marked increase in productivity. Remember:
Walking is waste.
5. Unnecessary processing is expensive.
In many company's processes, people are doing unnecessary steps. For
example, one company had an inspection process for incoming goods. However,
in the many years they've done the inspections, they've never found a single
bad product. So the question is, if their suppliers have proven to be good
and reliable, why is the company still doing the inspections? Any step that
proves to be unnecessary wastes both time and money. Think about how many
reports you receive that you never read. Why is someone still creating that
report for you? Consider how much customer information you gather that you
never use. Why are you still gathering the data? Just because your company
has always done something a certain way doesn't mean you're doing it the
right way. Examine your processes to discover what's really necessary and
what's simply waste. Then get rid of the wasteful steps so you can speed up
your process. Remember: Forget how you've always done it; do it right.
Reach Your Profit Goals…Faster
While many people believe they can't be any faster because they're already
too busy, the truth is that you can be a lot faster without being busier.
The key is to examine every aspect of your company to see where you have
waste, redundancy, or just downright slowness. The good news is that you'll
likely find that only four percent of your processes are causing fifty
percent of your troubles. In other words, you won't have to fix a lot to see
a marked improvement. In the end, the more productive you can make your
people, products, and processes, the greater profits your company will
realize.
ABOUT THE AUTHOR
Jay Arthur, the KnowWare Man, works with companies that want to double their
profits by plugging the leaks in their cash flow. Jay created the "Lean Six
Sigma System," a collection of audio, video, books and software, is the
author of "Lean Six Sigma Demystified" and created the "QI Macros SPC
Software" for Excel. For information about how to plug the leaks in your
cash flow, sign up for free lessons online at:
www.qimacros.com/freestuff.html or call (888)468-1537.
|
|
|
| © Copyright 2008/Exchange Morning Post/Exchange Business Communications Inc. |
|
|
