Profits On Purpose | Eliminating Mistakes: Can My Business Be More Efficient?
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Eliminating Mistakes: Can My Business Be More Efficient?

Last week we did a deeper dive in to Shortening Cycle Times. This week we’re going to talk about how to eliminate mistakes. No matter what type of business you’re in, we’ve all made mistakes in our sales cycle, production/delivery cycle or billing/payment cycle. As we try to shorten cycle times, that means we’re going faster. Often mistakes occur when that happens. Your sales person quotes the wrong price or doesn’t have updated costs in his quote. Your production people miss the specifications of the client’s product and you’ve created waste. You bill the client for the product but don’t include shipping or freight. All these things have a negative impact on profitability. So, how do we eliminate mistakes?

When things are going good, like when the economy is expanding, there’s lots of business out there and there’s not a lot of pricing pressure or competition, your profit margin typically covers a lot of these inefficiencies.

However, when the economy slows down, everything changes. Customers cut back on spending and you can’t increase prices, or you may even have to lower them. How do you save money?

It’s important to pinpoint the causes or errors. Mistakes are not a sign of incompetence.   Mistakes usually occur because something is wrong with your process. The best way to discover these reasons is to ask the people who do the work. Some questions might be:

  • Are there any physical obstacles contributing to errors?
  • Are co-workers rewarded for quantity or quality?
  • Do co-workers have to interpret anything?

Once you’ve asked your people for input, how do you implement process changes to eliminate mistakes. Some solutions may require significant investment, either people, time or money. However, some may not. So, how do you pick?

My suggestion would be to consider the following:

  • Select solutions that have virtually no cost. If you can fix mistakes for $100 or less, that’s a great deal for you.
  • No new staff, many people will select a solution that requires you to hire staff. I’m not saying that’s a bad idea, but the long-term cost to hire a person is substantial. Plus, there’s no guarantee this person can pay for themselves long term.
  • Choose solutions you can implement in 30-60 days. Try hard not to take on a long-term fix that could end up taking months or even years. Company priorities often change quickly and that could easily downgrade the long term fix you’ve implemented.

Eliminating mistakes can be difficult to tackle, but hopefully these ideas will help you run your business more efficiently in the future. How do you eliminate mistakes in your business?

Bill McDermott
bmcdermott@mcdfs.com
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