Where is the money?
The seventh profit driver, accounts receivable (AR), sounds a little dull but is actually one of the more important barometers of the general health of the organization. AR can be a very
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The by-product savings in variable overhead costs
Finding the opportunity with variable overhead costs requires trying to understand how these costs are allocated in the financial statements and then analytically drawing some correlations between those costs and the process hours.
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The variable nature of fixed overhead costs
When companies volumes decline they are often stuck with more fixed costs than they need. Fixed costs are often much more difficult to reduce than variable costs because they represent a longer term commitment in many cases.
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How much indirect labor do you really need?
Indirect labor includes supervisors, material handlers, quality technicians, mechanics, and IT support, all functions which are required to support the production of goods or services. While the functions are important to keep organizations working, its not always easy to determine how many people you actually need.
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The two components of direct labor costs
Hours worked are driven by how many people you need to run a process to achieve some volume output. So there are two distinct analytical questions; how do you staff the process, and how well does the process run?
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The conflicting objectives of materials management
Material costs can make up a significant part of a product’s cost structure, often many times more than labor costs, so it’s a good profit driver to focus on to find opportunities.
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The process of generating revenue
Cost reduction is generally perceived as fairly negative whereas revenue improvement is almost always positive. But many improvement projects focus on cost, rather than revenue. Why is that?
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The ten key profit drivers
When we look at organizations to assess opportunity, we focus on ten key profit drivers.
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Are suggestion boxes useful?
Suggestion boxes are one of those seemingly good ideas that can easily backfire. When we are studying a process area we create a big wall map which is a visual presentation of how the process works. It makes it easy for employees to see how and where their part of the process fits into the whole.
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Managing vertical functions in a horizontal process
Due to the functional nature of most organizations, workload can become quite easily unbalanced when you look at it from the perspective of a horizontal process.
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