Article by Karen Mortimore
It’s common for businesses at any stage of growth to suffer a decline in profit. In order to remedy the situation, it’s vital to first diagnose the problem.
Waste can occur in various areas of your business simultaneously. Like a leaky boat, you’ll continue to sink if you don’t find the leaks and repair them.
It’s a systematic process where a business reviews all its operational activities, not only to identify the causes of a decline in profitability but to then implement strategies to turn things around.
Waste elimination is one of the most effective ways to increase profitability in a business. So, where should you start?
Thinking about where you’re wasting money, time and resources in your business can be overwhelming! That’s why it’s best to follow a structured audit process and perform it regularly.
Where can you expect to find waste in your business? Here are some common areas.
Are you doing more than what’s required? Think about:
From the start of a job until when you get paid, what are all the activities in between? How much time is spent waiting for:
Where is the waste in terms of transporting people, goods and information, both internally and externally? Look out for inefficiencies in:
Are you using a sledgehammer to crack a nut? In your audit, consider whether you’re using the appropriate tools and processes, including:
Usually related to waiting and overproduction, unnecessary inventory items can also qualify as waste. Improve the working capital available to your business by addressing:
You can lose money due to internal defects found before sale, and the cost of scrap, rework or delays. After sales, you can also lose profitability through warranty claims, on-site repairs and the loss of customers. Your audit should check for:
At SRJ Walker Wayland, we understand that undertaking a waste audit of your business can be daunting. Contact us for help identifying and fixing the leaks in your business.