Performance By Mike Hulser
Boosting quality, reducing costs, and speeding
production offer opportunities to improve
your bottom line in any economic climate
o matter what the current most people think in terms of prod- rate policies and procedures? Same
N state of your business is, you
can always improve one or
more of three things:
• The quality of the output.
• The cost of the output.
uct or service quality, which is very
important. In the business realm,
however, there is a vast array of
opportunities to improve quality.
Particularly when you use the term
answer. For example, does your
business have a clear delegation of
authority policy that shows who
has the authority to approve and
execute various actions (purchases,
• The delivery or speed of the out- process quality, you can broaden capital expenditures, employee
put. your look as to where and how to hiring, raises, etc.)? How about a
Let's take a look at each of these improve: current, accurate, and complete
three aspects of a production fram- • How about the quality of the organization chart, clearly show-
ing business. financial data at the end of each ing who is responsible for what
month? Can't its quality—its con- and the interrelationships?
Quality tent, format, presentation, expla- The list of possibilities for
If you can improve the quality of an nation, and clarity—impact the potential quality improvement is lit-
operation's output while holding effectiveness of your operations? erally endless—recruiting, employee
both cost and delivery/speed rela- Absolutely. Sales and margin by evaluations, compensation practices,
tively constant, you are making the product type, customer, and sales- inventory control, purchase order
operation more effective, which person are powerful additions to control, fringe benefits, communica-
should directly drive greater prof- your financial statements. So is tions, etc. You are surrounded by
itability, perhaps in terms of a inventory composition and agings opportunities to improve quality
potential selling price increase. of both receivables and payables. and thus positively affect profitabili-
When quality is the subject, • How about the quality of corpo- ty. All you have to do is look.
Cost are actually causing revenue and two people if one can do it.
Again, with all other things being which are not? • Physical inventory - Can you take
equal, an improvement in cost Other opportunities for con- it during off hours so that you
should directly drive an improve- trolling costs including looking at don't need to shut down produc-
ment in profitability. At a mini- the expense of such items as: tion? Better yet, how about
mum, margins should improve. • Holding a management meeting - implementing cycle counting and
Also, your ability to pursue Have an agenda and stick to it. eliminating the physical invento-
accounts that might have once Don't let the meeting drag on. ry altogether?
been deemed “marginal” is Invite only those you need to
enhanced. accomplish the objective. Make Delivery or Speed
Similar to the Quality discus- sure all are heard. Last, but not least, is delivery. Or,
sion above, the notion of cost often • Unloading a container - Push to more generically, speed. All other
all too quickly gets narrowed down get it done quickly, getting the things being equal, when you
to product or service cost. These materials into production, but increase your speed, you can make
are both primary concerns, but you try to avoid overtime pay. Also a direct contribution to effective-
are also surrounded by sizable costs try to move the materials only ness and, therefore, profitability.
that needed to be managed and once, if possible. Speed has always puzzled me
optimized: • Implementing a new system or because many owners and managers
• Personnel Cost - How do you get website - In these arenas, how don't readily think of it in terms of
more important things done with much you spend might have a critical opportunity to improve
the same or fewer number of nothing to do with the function- the performance of an operation. It
people? In a challenging econom- ality of what you get. Think hard is a big one. Some examples of
ic environment, such as the cur- about your needs and require- potential speed improvement are:
rent one, with the ability to give ments. • If you hold a metrics-driven
employee raises sharply limited, • Delivering product - Try to com- weekly management meeting on
how do you keep your best peo- bine trips, including picking up Wednesdays, try Tuesdays or—
ple motivated and fully engaged? inbound materials. Don't send better yet—Mondays. Maximize
• Occupancy Cost - How can you
get more output/sales/work done
using the facilities you already
have? If you are underutilizing,
can you rent space out to another
• Marketing Cost - Are you getting
the best return (sales and margin
growth) possible with what you
are doing? Could you reduce
expenditures and get the same
result? Could you change the
media or the message and achieve
even greater sales and margins?
Do you know which programs
the time left for corrective There are a number of other • Producing a catalog, newspaper, or
action. opportunities to improve and/or other promotion - Don't let people
• Push to get monthly financial capitalize on speed: get fooled into thinking the pro-
statements delivered in five to • Physical Inventory - Minimize motion is the result. More sales is
seven business days instead of the time your production the desired result. Push to get it
weeks later. If the score is process is down. done. Often, the longer you chew
important, you want it now. • Unloading and putting away a on it, the less exciting it becomes.
Again, this maximizes your cor- container - Keep the material When you consider all of the
rective action time. moving. above, it is pretty hard not to come
• Reducing factory production • Getting a new system or website to the conclusion that all businesses
cycle time will result in either up and running - Push for com- have ample opportunity to improve
more sales and/or lower cost. pletion. When it is close to their operating performance by
Keep pushing material through being done, get it in play and focusing on improving the quality,
the process. Constantly be look- perfect it on the run. If you cost, and speed of key processes. ■
ing for product that is not mov- wait for perfection, you will
ing, that is laying around wait- never be satisfied.
ing for something to happen. • Responding to system/computer
The faster you can send materi- issues - The system is the heart Mike Hulser, who does business as The Biz
al through the factory, the less of most modern business. MD, is a Hawaii-based management and
financial consultant and turnaround specialist.
chance you have for damage, Therefore, system problems are, He is also the CFO at Pictures Plus. You can
pilfering, misplacement, etc. in effect, heart attacks. Deal reach Mike at 808-672-0220 or
• Cutting product “order to with the issues quickly before email@example.com.
receipt” cycle times can have the they become fatal.