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Improve the Bottom Line

6/6/18 10:00 AM


A better strategy leads to better results

Back in the late 80s, I was an Operations Manager at a job shop manufacturer. I was responsible for all aspects of the business group I ran (except sales) and had seven supervisors reporting to me. The data I used to measure how we were doing was our on-time delivery; because that was the data Senior Management used to judge me. I'm proud to say my group consistently outperformed the two other business groups in the company.

How did we do it? Well, it wasn't easy. Lots of meetings, lots of management by walking around, and I had a lot of supervisors working for me. What I didn't realize is we were driving blind. Fortunately for me, the company hired a cost accountant who gave me vision.

That cost accountant taught me that I will never understand what was working and what wasn't, until I understood the estimated and actual gross profit of each work order. Once I knew that, I could find the biggest gaps and investigate the cause. By fixing the cause, we became better. Much better. Our labor efficiency went up over 40 points and our bottom line soared. We were the same people with the same enthusiasm, but we were achieving much better results. The difference was data. It focused our energies in the right places.

Of course it didn't happen overnight; and it was challenging. However, it would have been impossible to achieve the results we did without knowing our costs. Focus your energy on knowing your estimated and actual costs, and then analyze the difference every day. You'll be glad you did.

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Jack Shannon

Written by Jack Shannon

Jack is the President of Visual South and has been working with ERP since 1996 when he bought it in his role as a Plant Manager. Since 1998 he has worked for Visual South with roles in consulting, sales and executive management.