How to Produce More - Better - Faster - at Lower Cost
Cost Reduction is today’s key element to preserve business, however it represents some important decisions to make and actions to take. Many people will rather ignore the problem until it is too late.
The Leaders though will immediately react positively: Defining, Measuring, Analyzing, Improving, and Controlling the situation. The classic all too familiar DMAIC process that we have learned in the basic Improvement Strategies.
In order to Reduce Cost of operations it is important to follow that procedure or our energy may not be focused on the most important factors that can be corrected and improved. Probably we all can remember when we took some action putting a lot of effort just to discover that we did not go after the Root Cause of a problem. A good way of reducing cost is always to avoid misuse of our resources so let us make sure we address the real problem and work at it. Some companies though, are trying to reduce cost by letting go of their most valuable people. Problem: if by chance the business picks up again, they will not have the human power to keep up with the demand and will have to spend money training new people.
One very typical way of reducing cost has historically been to deliver less product (like the food industry does many times reducing the size of their products), or compromise quality, like many cases we may have in our memory but prefer not to remember.
The Real Solution to Cost Reduction
This third and best alternative is to improve our efficiency and effectiveness. Whatever you are producing, you can be sure: it can be done better. For the last 20+ years that is exactly what I have been doing for my customers.
The best of this approach:
It is the Easiest alternative to reduce cost.
By doing this, we may also be able to increase the volume of product we can send out the door, and bring the price down while keeping the same or better profit… this is particularly feasible in manufacturing.
Not few companies have been able to beat their competitors this way. That is how Walmart, Safeway, Mission, Heinz, Pepsico, Toyota, Honda, Boeing, and many other exemplary businesses of all sizes and industries have done it and very possibly you can too.
This third option is the smartest of all and we need to work hard at it. One first step would be to analyze the process and dissect all the components of each step. Cutting cost will come from observing and listening to the people who perform those operations.
We at MORA International Consulting are Ready for the Challenge. We can help as we have hundreds of companies in Manufacturing and Non-Manufacturing environments.
