Lean Manufacturing: How eliminating waste will increase your profits

Nov. 5, 2008 - PRLog -- Many small business owners and corporations in Southern California are wondering how the rapidly changing global economic markets are going to affect their bottom line profits. To many of them, these challenges may sound uncomfortably familiar:

•   Cash flow problems compounded by slow paying customers experiencing growing pressures in meeting their own financial goals

•   Banks reducing or eliminating lines of credit to small business

•   Tighter cash flow causing increased lead times due to lack of materials and resources

Fabio Gomez, an experienced Business Consultant who works with small manufacturers on a daily basis has developed some practical strategies to meet the uncertainties of our fluctuating economy.

1)   Expect the unexpected as a regular condition of your working environment: New competition both here and abroad, price increases in raw materials, employee’s issues, regulatory compliances, weekly supply chain challenges and unstable economic conditions compel the small business manager to be knowledgeable about lean practices and being adaptable in their decision making process.

2)   Your competition is fearless, are you? The competition does not sleep and is actively working on cutting into your market share. They are doing the right things and are committed to eliminating non value added activity in their operation. Because they use this effective business philosophy and you don’t, they may be leaner and meaner than you.

3)   Benchmark your competition: Learn how your competitors have implemented a “Speed to market” philosophy that increases profits by faster, leaner (less waste) more flexible and innovative strategies in getting their products to market.

4)   Time is of the essence in positioning yourself to be more competitive: Although the techniques and tools to be more competitive and profitable are available, many companies do not use them because they “do not have the time” and suffer from the “we’ll do it tomorrow” excuse. This short sided philosophy continually impedes them from being more profitable by the elimination of waste. Do not be one of these companies if you wish to survive the current economic downturn.

   Fabio Gomez, a Small Business Consultant with California Manufacturing Technology Consultants (CMTC) offers the following advice for increasing your competitive edge:

•   Identify the areas of non value activity (waste) that exist in your operation

•   Estimate the financial impact of the elimination of waste in each area

•   Prioritize the elimination of waste by the highest Return on Investment (ROI)

•   Develop a plan to eliminate the waste in their value stream

•   Implement a plan for eliminating non value activity throughout your company. Developing and executing a plan to be more profitable through the elimination of waste is the most difficult step in the road to success. Unfortunately, most companies do not have the stamina to stay the course and often abandon the plan when they encounter resistance to change and new methodologies. If that sounds all too familiar, these philosophies for a “Lean Enterprise” can be utilized to eliminate the waste in any area of the business.

•   Give the customer what they ask for by being lean, more flexible and adaptable.

•   Increase your “Speed-to-Market” by being fluid and innovative in your business strategies

•   Make changes that reduce expenses and improve profitability

•   Use financial ratios to monitor the health of your business and make adjustments as required to accomplish financial goals

•   Avoid increasing debt by cutting your operational costs. This is accomplished by eliminating non value added activity throughout your company, which will increase your bottom line success.

CMTC is a private, mission-oriented non profit corporation, affiliated with the National Institute of Standards and Technology (NIST) Hollings Manufacturing Extension Partnership (MEP). Our affiliation assures performance standards that translate into customer services with consistently high benefits and satisfaction. Quarterly NIST surveys ensure full accountability and a performance scorecard of certified value for our customers. Our agreement with NIST covers non-project costs so that all client fees cover only those services provided. For more info call Fabio Gomez at (310) 809-6614

CMTC Offers specialized technical skills training through a partnership with Cerritos College.

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CMTC is a private, mission-oriented non profit corporation, affiliated with the National Institute of Standards and Technology (NIST) Hollings Manufacturing Extension Partnership (MEP).