Improve Profitability without Increasing Sales

In this feature we highlight areas of waste which, if controlled, can improve the profit in your business.
Businesses need to recognise that processes either add value or waste to the production of an item or service. Waste elimination is one of the most effective ways to increase profitability in businesses. In order to eliminate waste, it is important to understand fully what waste is and where it can be found. Below is a summary of the seven wastes which have been identified as the most prominent ones by companies such as Toyota.

? Overproduction - producing more than needed or earlier than required.
? Waiting - time not being efficiently used. Time can be used to add value by improving processes.
? Transporting - every transport event is an opportunity for damage/loss to occur and quality to deteriorate.
? Inappropriate Processing - 'using a sledge hammer to crack a nut'. Are you using the right tool/process for the job? Are you using the right person for the job?
? Unnecessary Inventory - this is Work in Progress (WIP) and is a direct result of overproduction and waiting. Reducing WIP allows the other problems to surface.
? Unnecessary Motions - this is related to ergonomics and is seen in all areas of business from a disorganised desk, poorly planned warehouse to a stop/start mentality.
? Defects - cost money either now or later and their cost comes directly from the bottom line - defects found before sale incur the costs of scrap, rework or delays; whilst defects which have been delivered to customers incur costs from warranty claims, onsite repairs and potential loss of customer.

If you look closely at your business you may already recognise the impact of some of these 7 wastes. Alternatively we can assist you in conducting a clearly defined waste audit and help you to reduce costs.

Of course, it is essential not to overlook the eighth waste by failing to fully utilize your employees. Using their knowledge and ideas can really address the whole issue of waste and make a vast improvement to your bottom line.

In this feature we highlight areas of waste which, if controlled, can improve the profit in your business.
Businesses need to recognise that processes either add value or waste to the production of an item or service.

If you would like more information on this or any of the previous subjects we have features, please contact Les Styles or Ian Lloyd.