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) are:
Marketing/Sales, Quality, Engineering, Manufacturing, Finance, Purchasing/Procurement, HR, IT, Facilities/Utilities/Acquisition
Our Profit Power area for the month is Quality. Quality, as you will see, has a big impact on your bottom line. But some of you may think that ensuring quality means implementing a sophisticated system. Oh boy, here we go again talking about Lean, Six Sigma, Toyota Production Systems, SPC et al.
Well, I’m here to tell you that YES! you can have a successful company without doing any of these things. I can already feel that some of you about ready to get out your Six Sigma Black Belts and break some heads. Before you do, I will also say that unless you can come up with programs that can duplicate some of the successes of these processes and systems, your quality will suffer. And if your quality suffers, so will your profits. Studies show that companies with high quality realize 20% higher profits, after the initial investment into the quality processes.
That said, it is important for any company to evaluate the needs of their clients and customers. After all, profits come from revenue and revenue comes from the customer. It is not a matter of what you want to do, it is a matter of what THEY want and need.
For example, If you have mostly aerospace customers, chances are good that your quality system as well as other control systems will have to conform to many standards for you to even quote the work. QS 9100 and using NADCAP approved vendors will be routine.
However, if most of your customers are more commercial in nature, such as lawn and garden tractor, or you are making parts for aftermarket service applications, you may not have to have strict standards in place.
Now, I’m not saying that you don’t have to have a quality system in place or that you can make any kind of junk and sell it. After all, one of the reasons you are in business is to make a profit and by having better quality, you can attract jobs with higher profit margins.
Your quality system must be tailored to your type of manufacturing and you must set up a system accordingly. You will still have to have a basic quality system in place to ensure that your instruments are calibrated and that you can prove that you are making parts to the print. Perhaps an ISO 9001 or 9002 system will suffice.
I know that some customers insist that their vendors have systems in place that are better than those they have in their own plants. I had one myself at a previous job that required all of their vendors to have certification to ISO9001 or 2 or AS9100 and they hadn’t gotten either certification. But then again the customer is always right (except when they are wrong!!!) Still, having a good quality system and measuring those items that affect your profitability will ensure that you can stand up to any audit regardless of what your customers do at their facilities.
For those of you with Six Sigma Programs, Lean systems etc, I say “Bravo!!”. You say what you do and do it to the extreme while maximizing your profit potential. For those that haven’t, It is critical that you have in place sufficient systems to guarantee that your quality is certain and can prove that your parts are good. In either case, the company will be able to satisfy their customer’s needs while maintaining their own profit margins.
Primary $Profit Power$ Point (you can use today!)
Whatever type of quality system you have, make absolutely sure that you are meeting your customer’s requirements.
Also, please check out the video "Exhaust Notes" using the link under the picture of my 1967 Chevelle to the right. In it you will see me discuss how hiring in haste can lead to getting the wrong people in your shop which will require you to let go of them. The rule "hire slow--fire fast" is discussed with an example of what can happen if it is not followed.
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 firstname.lastname@example.org
Your Profit Driver