As has been widely reported, increasing costs are having a significant effect on business profit margins.
Staff shortages and supply chain issues are just some of the problems causing the increase in costs currently faced by business.
One of the areas that organisations can focus on during this time is the elimination of waste within the business.
Many businesses incorrectly consider the elimination of waste to be a simple exercise of reviewing the various expense lines of the profit & loss statement and making cuts. Not only is this simplistic and often ineffective, the process can also unnecessarily harm the underlying structure of the business and customer service.
A better approach is to take the time to undertake a detailed review of business systems and processes, to identify inefficiencies which can be eliminated. The elimination of inefficiencies will reduce cost and maximise the use of scarce resources.
Inappropriate processing
One area to consider is whether inappropriate or costly processing is occurring within your business.
It is amazing how many times I see the same person, performing the same role in a business for many years, with their salary increasing significantly within this period due largely to time employed. This alone has made the relevant process more costly than it should be because the person concerned has not been developed and progressed to new roles within the business.
Furthermore, as technology evolves, it is imperative long standing systems and processes are reviewed to determine if new automated alternatives can be adopted.
Elimination of defects
Another area is the elimination of defects.
There can be internal defects found before a sale resulting in costs of scrap, rework or delays increasing. There can also be external defects associated with products delivered to customers, which in turn increases the cost of warranty claims, on-site repairs and a potential loss of customers.
Next steps
Given the inflationary pressures faced by business, there has never been a better time to undertake a waste review on your business.
Contact Munro Noon Business Advisers for your complimentary meeting to discuss ways in which you can reduce waste in your business.