Cut It Out!

Defective products can be replaced but defective services leave a bad experience – plus you messed up. Whatever, both destroy productivity and damage reputations.

The problem is waste comes in many forms – some not readily obvious. Profits get drained in ways hard to grasp putting your business at huge risk alarmingly fast.

You'll only confront loss by understanding its causes and eradicating it. How? Come to the Target 2017 Open Day and see "Cut It Out!", the workshop from Productivity Leaders.

How profitable work goes bad

Building computers is a great way to make money. Margins of 30% plus are easy. Fine and dandy until things go wrong.

But before you think, "mistakes, me: no-way!?" have you ever done a quote to find the customer hadn't told you everything? Started a build to find the customer wants to tweak the spec? Perhaps spent a bit more time making a job ‘perfect'? Or needed a site visit because there were teething problems with the new computer?

I could give more examples but you get the point: it's all waste damaging profits and reputation. And that 30% margin starts draining away. It was all your money - why chuck it in the bin? Don't – come to "Cut It Out!" and find out how.

'Not-quite-right' is murdering your business

The odd mistake is just life: no-one's perfect after all. But could it be not getting things right-first-time is a bigger deal than you think?

Sure, the original work is wasted but rework uses time you'd have spent doing something else if you'd got it right. So the one–off cost isn't double, it's triple.

But be honest, everything you do could probably be done a little bit better. Minor errors are everywhere and when you start taking account of these, the impact is frightening.

Accounting for waste as lost gross margin and using data from an average IT retailer I worked out losing one % point depresses profits 16%. Lose 10% and it drops 118%.

As if that wasn't bad enough depressed profits are harder to recoup as each sale contributes less to variable overheads. So you have to sell disproportionately more to claw back your losses.

Alarming? You bet. More on this next week in "How to Sell at Higher Margins than Your Competitors".

Errors and rework aren't trivial inconveniences. They're absolute killers. You must not tolerate them. Come to "Cut It Out!" and find out how.

Unintended consequences

Perhaps this one's controversial but it's something that affects any business needing to return faulty goods to its supplier – returns. Besides the disappointment, nuisance and inconvenience there's the waste. On top of the defect itself, you need to send it back, get it tested and processed so you can get a replacement or credit. And anything that trips this up just frustrates things, makes it worse and creates more waste on top.

Sure, time may press you to dash off the returns process but you'd be surprised at what we see when customers return stuff to us.

Wrong products identified on wrong invoices. Products returned that don't match the product identified. Multiple returns made under one reference. Stuff just sent back from who knows where. Faults described as "rebate required" or "broken". Products returned that aren't faulty. It's sometimes said "you couldn't write it" but you name it, we've seen it.

But was any of it intentional? Probably not. Did any of it delay things, multiplying the waste generated? What do you think? Don't throw away your money half doing stuff because you're in a rush. Get it right! Come to "Cut It Out!" and find out how.

Cut it out!

There are many forms of waste. Some of it more obvious than others. What matters is they all destroy productivity. Meaning they eat margin and crush profitability. No business, large or small can afford to waste money. The total cost can rapidly become your entire business. Yet so many businesses tolerate not getting things right-first-time. And make things far, far harder for themselves than needs be.

Combating waste is an imperative. Having reliable ways to identify it a must. And deploying effective remedies to eradicate it essential. If you'd like to find out more join Keith Findlay of Productivity Leaders at the Target 2017 Open Day. Learn how to spot waste and cut it out before it kills your business. Register now.