In a Faltering Economy, Shortcuts Can Cripple Your Business

With the economy faltering, customers hesitating and suppliers balking, every company worries about sustaining profits. In the face of these market forces, companies can rarely sell their way to higher profits. Although executives and employees can't do much about the external forces, they can have a major impact internally.

Faced with shrinking profits, companies invariably try to cut costs by reducing staff, paying suppliers more slowly or "cheating" the customer by using inferior quality materials. These quality shortcuts can cripple and even kill a company in the long run.

Earnings shortfalls make everyone look for a quick fix. They settle for cheap tricks that damage the company's reputation instead of focusing on ways to simplify, streamline and optimize the business to cut costs, boost profits and retain customers. There is a better way that doesn't take forever or cost a fortune.

1. Simplify

Every work area collects out-of-date equipment and materials. Keeping that junk around costs money and clutters the workspace. To trim costs and boost profits, start by going through every nook and cranny and throwing out everything that isn't related to the current way work is done. Once the clutter is gone, it's easier to streamline the workflow. Then, organize and label the materials and equipment into consistent locations. It's not unusual for work materials to be spread all over a workplace, making it difficult to find what is needed, when it is needed.

2. Streamline

The next step is to streamline the business by removing barriers and redesigning the work to minimize resistance and delays in the workflow. All businesses suffer from Lazy Product Syndrome (LPS). While employees work on the product or service for perhaps three minutes out of every hour, the product sits idle for the other 57 minutes (the 3-57 Rule). That's why the elapsed time from order to delivery can take weeks instead of hours; hours instead of minutes; or minutes instead of seconds.

Take this test: Follow a customer's order from start to delivery and notice just how little time is actually spent working the order. Notice how much time it spends in an inbox or an outbox or a queue somewhere. Notice how much time it spends waiting on the next step in its journey. The order spends 95percent of its time waiting for something to happen.