From EFI Group’s Leadership Team
While increased success for manufacturers can certainly be triggered by the development of new a “big idea” or by a tried-and-true business growth strategy such as increasing market share or expanding into new geographic reasons, it can also stem from something much more basic.
In fact, what can often unlock immediate next level of profitability is simply revisiting the basics of your business approach to identify possible drains on the bottom line.
We were reminded of this recently when we gathered our own leadership team and asked them a single question: What were the most common success-derailing mistakes that you saw manufacturers making this year?
Across the board, our team’s responses suggested that one of the most valuable tasks a manufacturing company might undertake this year is taking a hard look at best practices against how business is actually being done within the firm.
To help you do just that, we took our list of “common mistakes” and translated it into super practical business commitments for re-aligning process and approach with bottom-line boosting best practices.
Here are the 10 commitments we think can most effectively stop profit drain and increase success:
#1 Remember the Big Picture: In manufacturing it’s easy for larger goals to get overshadowed by details because details are so vast. Keep in mind that the details only exist to achieve the vision and if the big picture is absent from decision-making, the bottom line is at risk of taking a big hit.
#2 Make Priorities Concrete and Widely Known: The priorities of your company need to be understood by every person at every level to guide both long-term and day-to-day decision-making. If priorities aren’t perceived as concrete, second-guessing and competing interest issues will always arise. At the same time, allow priorities to shift with changes in the business environment. If a new priority is established act swiftly in communicating the new mandate to all involved.
#3 Examine Value First: Too often investment or business decisions are based on cost rather than real value. Looking at value first sets you up to make more accurate decisions because concerns about cost won’t cloud your perspective. Once value is determined, then examine cost and ROI – and make sure to calculate potential risks as part of costs in the final analysis.
#4 Hold No Information Back: Lack of information is primary cause of bad decisions and recommendations. Whether discussing a project with employees or outside service providers, sharing full information is the best way to make sure everyone is on the same page and the best solution is delivered.
#5 Fully Define the Scope of EVERY Project and Task: While it can seem like overkill at times, having a process that ensures every aspect of a project or task accounted for is the only way to avoid the surprises that are par for the course in manufacturing. Use past projects to design a template that triggers thinking about scope areas that might otherwise be overlooked.
#6 Stop Underestimating Costs: If you’ve been in business for a year or more, your company has a project history that should give you an indication of cost estimating accuracy. Evaluate what caused inaccurate estimating and rely on that information instead of believing it won’t happen again. Additionally, make sure to adequately budget for enough preliminary and final engineering to complete the total project scope – a cost that many manufacturers neglect to include.
#7 Always Evaluate Service Providers: No matter how well an initial meeting with new provider goes or how reliable a referral source is, do not skip doing your own due diligence before signing on the bottom line. Everyone is on their best behavior at the start and even if all signs point to “go” throughout the vetting process, you’re still likely to gain additional helpful information as you proceed through the entire process.
#8 Track Data: In today’s manufacturing environment, every improvement decision should be backed by proof. Achieving greater efficiency demands that accurate data is received and analyzed on a consistent basis.
#9 Systemize Knowledge Transfer: Every key employee has critical information that’s just as important as the data your company is tracking – and which can’t be extracted once that employee is gone. Designing a formal process for capturing and passing on that knowledge is essential for the long-term health of your company, but doing this is often only thought about after it’s too late.
#10 Foster a Fear-Free Culture: Create a safe environment for employees to contribute ideas for improving and growing your company. While designing this type of culture successfully requires serious thought and follow through, you can start by making it known that you welcome thoughts from your team. Once your culture of contribution is fully conceived, it’s your job as a leader to nurture its actualization.
Tip: Whether you develop a formal idea-sharing culture or not, regularly solicit input from your operating and maintenance team members. They likely understand your company’s day-to-day challenges better than anyone else.
No one takes developing strong processes that increase profitability more seriously than our team. If you’re a manufacturing company seeking to increase results in 2016, contact Jim Solich at email@example.com.