Redefining Excellence in Every Challenge: Transforming Visions into Reality
Krutibas Biswal PMP?,PMP ATP?, PSM?
Program and Project Management | Business Excellence | Risk Management | Data Analytics | Design Thinking | Business Process Transformation |Change Management |Enterprise Agile Coach
Every organization has two sources of “Cash Flow’. Cash is the lifeblood of our business.
To boost profitability we either want to earn more or lose less.
"The true measure of financial success is not determined by your earnings, but by how much you are able to retain"
Business spends most of their time and resources focusing on trying to fill the cash bucket with new customers and virtually no time or money sealing leaks caused by internal processes inefficiency.
The Juran institute has found that cumulative cost of delays, mistakes, rework, and scrap will add up to 25% to 40% of your total expenses.
To further explain let’s plan to spend a day within our business processes and track every mistake, bug and customer complaints and then calculate the cost of finding and fixing each one.
Now these errors aren’t your fault, or they aren’t the fault of your people. Its your system and processes that are fault, they let people do mistakes and that could be prevented.
This business excellence playbook gives you the methods and tools to plug these leaks in your cash flow. For example, Lean Six Sigma methodology is a result-oriented, project-focused approach to quality, productivity, and profitability. These reductions translate into cost savings, profit growth, and competitive advantage.
Let’s calculate the bottom-line benefit with below example:
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While we focus on increase sales by 100% [ 1. Increase Sales], however 10 % decrease in cost have larger impact on overall profitability [2. Reduce Cost]
Here are few recommendations to plug the leakage.
Big Leak #1—Delays: The delays in the various steps of your process lead to significant time and financial loss, ultimately affecting productivity and profitability.
Big Leak #2—Defects: The presence of defects, mistakes, and errors that require correction or scrapping. Addressing these issues, which should not have occurred initially, consumes valuable time and resources that could be better utilized to serve customers and enhance the bottom line.
Big Leak #3—Variation: The inconsistencies in your products and services, ranging from minor to significant differences across different pieces, days, and months.
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