By Michel Boisvert, President of IPSO Technologies
The organizational inefficiency, this plague beating down the profitability of organizations is often preventable in many cases. The value-added activities are hidden so well that sometimes it is difficult to discern in the daily operations of your business. Here are the 10 most common sources of inefficiency…
1. The inventory and procurement
A necessary evil to some, optimizes inventory purchase costs by reducing the number of orders. By buying more and pooling purchases in one purchase, you can reduce costs. However, store also has a cost: storage costs, manipulation and rent of the warehouse. But too little inventory can create shortages that drive up costs: emergency, delivery fees, penalties, etc.
To buy the right amounts and optimize inventory, the use of MRP or ERP management software is the ideal solution. You can even lower your costs significantly. Usually you can expect a 75% reduction in purchasing costs and 20% to 25% of inventory costs. A company whose stock is controlled property is much more profitable…
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill
2. The invoicing delays
The delays and the problems of invoicing damage largely the profitability of a company. The impossibility to charge quickly arises especially in the companies of service which have effort to count the expenses. These delays of invoicing cause payment times which can cause problems of rather important flow of liquid assets to put in danger the smooth running of the company.
3. Duplicate data entries
A real waste of time, entering the same information in several different systems adds unnecessary costs and delays without counting the risk of error. Submission, control, time cards, work orders and invoicing are often kept in several different systems. Much needless loss of time.
4. The time cards
Lack of Time (punch) at the factory and offices requires managers to make prowess to calculate their cost, which is essential given a daily basis. How many companies have no timestamp on the factory floor to raise the production time? There is evidence that the simple installation of a factory stamp increases productivity by a factor of 5% to 10 %, although the data are not recorded. So why go?
5. Work orders / cost
Work orders are used to communicate information and details on manufacturing production workers. This is essential for any business to manufacture. However, many companies do not use work orders or make them manually. Impossible to automate the planning, it must supervise and handle errors. Without a work order, production cost becomes very tedious. And make without knowing its costs can hurt enormously to the profitability of the company.
6. The bids on Excel
The creation of bids in a spreadsheet or any other parallel system causes deadlines and additional costs. The retranscription of working vouchers and command brings the preservation of two databases of articles, customers and coûtants where numerous errors can emerge. Even if the calculation is sometimes complex, it is always possible to integrate it into its management system to avoid the errors and the costs which ensue from it.
7. The lack of integrated CRM
A CRM, it is a funnel of commands. Resulting from everywhere, the requests, the bids and the contacts solve themselves according to your cycle of sales there. You can so assure an effective follow-up of your customers and prospects. Joined into the management system, he allows to maximize your power of communication, to join easily the customers according to precise criteria as their region, their peculiarity or their profile of purchase.
8. The absence of performance indicators
Precise data and performance indicators are tools which the entrepreneur has to have at his/her disposal to make thoughtful decisions. In the absence of precise data, not easy to find itself there. When we navigate in the fog, the decisions which we take are not quite good and some are very expensive to the company. If you have no significant performance indicators, it will be impossible to you to implant a program of continuous improvement and it can cause an enormous cost for the company which aims at the growth.
9. The “meeting mania”
The meetings of committees can become an enormous waste of time, if they are not aligned on the objectives of the company. The management of meetings is an art is there and asks dexterity and efficiency. Held account that the cost of a meeting is the sum of the salaries of people which participate in it, get ready for it and execute it, it is very important to reduce the wastes of time at every level. A management system can then contribute largely to plan better and to define the meetings in direct link with the objectives of the company.
10. The absence of integrated software of management
The absence of systems integrated by type ERP often informs the addition of additional workforce several levels to mitigate the gaps of an inadequate system. 25% of the best managed companies use ERP software to plan better their resources and improve their profitability. With such a system, a company can grow easily and its value is clearly superior.
Assure the performance and the profitability!
Every year, enormous sums are wasted and often without knowing the owners who do not want to see these ineffectivenesses and underestimate largely their real costs. By calculating the value of your wastings, you will find very probably the justification in the setting-up of a real integrated software of management which will be very profitable for your company.