Proven Ways To Improve Your Profits
When people talk about business success they tend to express it in terms of increased turnover or market share. But in truth, what is most important is growth in net profit, and this doesn’t always follow from sales growth.
Whereas when we talk about improving your business, we talk in terms of business performance and profit margin.
Profit is what’s available in the end to reinvest or buy that Aston Martin! If the net margin of your business is say 10%, then only 1/10th of increased sales might go to the bottom line, whereas every penny in costs saved – whilst still delivering a valued service - will contribute 100% to increasing your profits.
In fact we’ll show you how you can simultaneously lower your costs, cut waste, improve quality, increase productivity and increase value to your customer.
How?
By adopting ‘common sense’ philosophies and tools such as Lean and Six Sigma.
Lean, Six Sigma and Profitability
The Lean approach is about identifying the least wasteful way to provide value to customers. Toyota, who emerged from the ravages of the Second World War to become the world’s largest car manufacturer, pioneered Lean over 50 years ago. They now make more cars with lower defects using fewer employees than their rivals.
Less wasteful means using less time, less resource and lower cost = greater profits.
Value to customers means fewer complaints and greater loyalty = greater profits.
Six Sigma is in essence a statistical tool which uses various problem solving methods to uncover root causes of problems. The ultimate aim is to do things right first time every time. Companies such as Motorola, IBM and Rolls Royce use Six Sigma’s statistical tools and analysis to identify the root cause of variation in their production so they can identify and concentrate on the right solution.
Right first time means using less time, less resource and lower cost, and providing greater customer value = greater profits.
Getting and keeping new sales can be tough, especially in difficult times, so a complementary way to drive profitability is by the adoption of a lean approach, focused on customer value, improved quality, elimination of waste and empowerment of small teams.
Also see:
What does Lean mean for me?
What is ‘customer value’?
How do I go about it?
For advice and support with using Lean or Six Sigma in your business, contact us using the form to the right, or email info@mgarnerconsulting.co.uk or ring us on 0800 242 5287.