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Most manufacturing and distribution
companies have untapped sources of net profit – often as much as
10 percent of sales (that is, $4.5 million of added net profit
for a company doing $45 million in annual sales). What often
prevents them from unlocking this potential is a company’s
hesitation to challenge the status quo.
Finding
new profits calls for new ways of looking at your business. A
Midwest manufacturer with sales of $45 million unlocked 19
different changes to its business that generated $6 million in
new profits in the first year.
How was
it able to identify these opportunities? It employed a Profit
Improvement Program designed to uncover ways to positively
impact net income using a company’s best tool - its employees.
Generally, management has its eyes fixed on the big picture and
is not in a position to see the small changes that can make a
big difference. Who else is in a better position to identify
ways to reduce expenses or increase revenues than those who have
hands-on knowledge on a day-to-day basis with the business? Line
workers, warehouse supervisors, customer service
representatives, drivers, secretaries and even the cleaning crew
are more than casual observers of your business.
Seeing
things differently means shaking things up - a process that
naturally makes most people and companies uncomfortable. Like
anything that causes change, there are considerations that need
to be taken care of up front before even embarking on a Profit
Improvement Program.
Commit to change
An
organization changes from the top down. If the CEO and other
C-level executives aren’t on board, nothing will happen. It is
imperative top management communicate to the entire company it
is committed to change. If there isn’t a change in the process,
there will not be a change in the results.
Use an outside facilitator
Change can be seen as threatening if
not properly managed. To dissipate fear and foster an
environment that encourages new ideas, it’s usually necessary to
employ an outside facilitator. This individual, by not being
part of the company culture, offers two ...
...Continued
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