Making the most profit for a business
Posted 7th Feb 2016
Following on from last week: how do people make the most profit for business….
Gordon: Last week we talked about getting the right people in place in a business. Those with empowerment, a constant urge to learn, innovative skills, vision as well as being enthusiastic and champions of change. We could also add with the right attitude, passion, experience, willing to go the extra mile.
Julia: OK. Having established that successful companies have these wonderful people, how do we use such profiles in making the most profit for a business?
Gordon: In Japan some years ago, Taiichi Ohno, a Japanese engineer and businessman, developed Toyota’s Production System (TPS). He identified seven “wastes” in the system:
- Over production.
- Waiting Time.
- Transportation- delays, unnecessary moving or handling.
- Inventory – unnecessary raw materials, work in process and finished stocks.
- Motion – Movement of products or people that add no value.
- Over processing – Unnecessary processing or procedures that add no value
- Defects – reworking products or scraping defective items.
So, the first port of call in making the most profit for a business would be to look at the business processes and these seven deadly sins.
Julia: Interesting. I can see how this would support increased production efficiencies in manufacturing, but how can you translate these to non-manufacturing companies?
Gordon: Although the sins have a bias towards manufacturing, some, if not all, can be considered in all companies. The fact is that all companies produce products or services, whether it’s a marketing agency, a graphics design company, an accountancy practice, a college, a sports centre, an event management company – all have products, services or both. In one form or another all companies should consider how they are producing their products and services, view their processes and see if the sins listed above apply. Undoubtedly potential, and eventually real, benefits will be found through process manipulation and subsequent change.
Julia: Agreed. In my opinion it is essential that all people working in the business, at whatever level, need to contribute to the top and bottom line. I can see how reviewing and challenging processes would contribute to the efficiencies of any business.
Gordon: Right. However, there is still that final ingredient which both people and processes need to help make a successful business – and that’s technology. Without any doubt the use of technology can improve business efficiency, provide a better customer experience and coupled with the right people and improved processes make more profit for a business.
Julia: OK – Time for a cup of tea and some further thoughts. Talk again next week.