How to Increase Your Profits(In 9 Easy Steps!)
The $Profit Power$ Series Continues!!!
A look at the 9 basic areas of a manufacturing business that can improve your company and boost your profits.
The 9 areas (with this month's topic is highlighted in red):
Marketing/Sales, Quality, Engineering, Manufacturing, Finance, Purchasing/Procurement, HR, IT, Facilities/Utilities/Acquisition
This month's Profit Power method for making money is ENGINEERING.
This subject is one of my favorites, as I believe that most of the upfront planning and work done by any manufacturing company can be classified as “engineering”. No, it is not like the engineer on a train. BUT, the work done by either of these professionals can dramatically influence how much money will be made.
Two functions of the ‘shop engineer’
Just as a train engineer decides how fast a train will go or how to vary the speed during various parts of a run, the manufacturing engineer sets up a routing or process as to how the job will run through the shop. On a more basic level, an engineer may also be responsible for the design of the part or items. These two job functions form the guts of the “engineering” of the parts.
The shop engineer as ‘parts designer’
On the drawing board, the engineer has a blank sheet. If he or she designs a part or items that can be readily made by their own shop or multiple outside vendors, out of obtainable materials and relatively standard specifications, chances are good that the part or item can be made to print AND meet the product’s expected price and profit margin. If not, well, watch out and be prepared to get your checkbook out!
I can remember a job my company ran that had a very difficult hole shape that we could not make in-house. In addition, when we got quotes to have an outside company make this shape, frankly, I had to do a double take and even a triple take. The price was SO high that I actually called them and they replied that if I didn’t like the price, too bad, as they knew that they had a monopoly on this process. I then called the customer’s engineer about this issue and he told me “that’s how I designed it and that’s how it’s got to be”. Clearly both of these responses are way wrong but I just priced the parts and got them made as they were “engineered”. This customer is no longer in business.
The shop engineer as ‘efficiency expert’
Common sense on the design board can yield large returns on the shop floor. However, even a great design can be processed badly by shop folks causing higher than expected costs. Maybe the purchasing department tries to save money by making the part out of material that is the right composition but it’s much larger than required. Longer machining times result. Let’s say, in an effort to get a job done faster, expediting charges are paid or lots are split to push jobs faster through the system. Again, higher costs. Or a part is run in an obsolete machine much slower than even those who promote utilization strategies would let it run. Yet again, higher costs.
Make more money through design AND efficiency
Both design and processing go hand in hand to get the right product through the manufacturing process at the least total cost that should yield the highest profit. After all, that’s what everyone wants!!!! Right?
Primary $Profit Power$ Point (you can use today!)
"Get up right now, turn off your cell phone and go out into your shop. Stand there for 10-15 minutes watching one operation or workflow. See if you can find ANY way to improve what you are seeing to increase throughput and therefore increase your profits."
Also, please check out our new "Exhaust Notes" video using the link under the picture of my 1967 Chevelle to the right. In it, you will see me compare my 1967 Chevelle to a 2007 Lexus ES350. Both of them get you there, but clearly improvements have been made. Let's take a lesson from the evolution of these two cars. Don't let "That's how we've done it before!!" prevent you from making money saving changes.
Please feel free to explore my website at www.topgunconsulting.com
and see how we can help you improve your efficiency and get you on the road to higher profits and greater success! Check out my blog at: http://topgunconsulting.blogspot.com/
I look forward to talking with you soon at 602-510-5998 or email me at email@example.com
Your Profit Driver