Better Net Profits, Not Hyped-Up Business Philosophies

Issue #11237 - April 2019 | Page #19

By Todd Drummond

Whether your company is a single-location or a huge multi-location operation, 2018 should have been a banner year for profits for your company. Most of my clients were in the high teens and many were in the mid-twenties for net profit to total sales. How well did your company perform in 2018?

Too many poor-performing companies are promoting a “hyped-up single business philosophy.” By that I mean, they’re relying on a single strategy or practice that’s supposed to be their panacea of ideas to get better-than-average results. As an operation improvement guru, I can state, without any doubt, that no single practice, tool, or idea should be the all-encompassing fix to all your ill ways of doing business.

An overly used and hyped-up tool of the lean manufacturing toolbox is Six Sigma, which is not a cure-all, be-all tool that should be used in every area of your company. And yes, I have a Six Sigma lean manufacturing certification with industrial engineering training, so I know it won’t fix everything. Not everything needs to be studied for six months to find improvements that will make a real difference. Sometimes you need a finish hammer, not a sledgehammer, and the Six Sigma tool is a sledgehammer. For instance, if you want to load your delivery trucks more quickly, which makes sense to lower your operating cost and improve your existing capital investment of trucks and forklifts, try this simple process improvement.

Have real numbers to validate your improvement processes, such as the average number of deliveries being made per day, week, and month. Also, what is the average time per truck in the yard versus on the road for deliveries per day?
Ask the people loading the trucks what they think can be done to help them do their task more easily and quickly.
Reduce the distance of travel to load the trucks by moving the trucks closer to the inventory being loaded. Shocking idea, but the less distance you move the material, the less time it takes to complete the task.
Have more trailers than trucks so that your yard people can load the spare trailers with projects while the trucks are delivering other loads.
Reevaluate the number of personnel in supporting activities to accomplish the given task of loading the trucks. Just because, historically, you need X amount of yard personnel to load the trucks, this does not mean the process could be vastly improved with the addition of one or two more personnel. Run the numbers to see if adding personnel might actually result in cost reduction if enough trucks are loaded more quickly. What is the true cost of trucks not being loaded quickly enough to get more loads delivered?
Improve the organization of inventory locations and reduce the quantity of different inventory items. The less searching, and making them chase fewer items, the less time it takes to create the load for delivery.
Implement the changes immediately by empowering the people loading the trucks. This includes allocating resources, such as extra hourly time and possibly overtime hours, to make needed changes of rearranging inventory and other tasks.
Review the changes with the people involved in loading the trucks and discuss real data, such as average number of loads per day and truck yard time.
Make additional changes as they present themselves. It is a constant, never-ending process when it comes to improvements.

Start-to-end time for this simple improvement process is just a few weeks for most changes, not months.

During lean manufacturing training, it is best to break down all the basic lean tools into an easy-to-understand and implement way of thinking about all areas. Being able to take something complicated and make it easy to understand by anyone is key for your company when trying to implement the higher ideals or business tools of lean. Upper management can and should learn the more complicated tools of lean processes, but to have everyone understand and use them is simply unrealistic.

Empower, encourage, and reward an attitude of constant improvement. Why would anyone want to wait for improvement when it could be an ongoing and constant process within the company? Unfortunately, the vast majority of companies don’t actually do this with their employees, but those that do are certainly the better-performing companies. Companies that have a positive attitude towards constant improvement and actually empower and reward their employees for the improvements always seem to do better than average. They are not over-reliant on some single process or philosophy for improvement.

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