Help: the market is shifting

II Look at upgrading processes, equipment and software

Technology continues to advance. Re-evaluate the limiting factors on process speeds and efficiencies. Review the processes leading to your finished product by how many units per hour each processing step can support (in bakeries, this includes mixing, dividing, shaping, proofing, baking, cooling, packaging, etc.). Processes may need to be optimized through evolving practices or capital investments. Can better software help? Downturns may seem like the least likely time for reinvestment, but this is not always the case. For instance, in bakeries, the cost of an additional flour duster that allows for higher conveyor speeds, limited rework and better quality products is a nearly instant return on investment. If investment capital is available, investigate the return on process automation.
Automation can often yield mid to long term savings, based on a sound ROI formula. However, if used equipment is purchased, and there is no maintenance agreement with the manufacturer or broker, make sure that the savings are worth it. Buying used equipment that is not under some form of manufacturers or refurbishing service agreement can be very costly. Equipment is only valuable if it works.

III Streamline other physical costs

Take a look at your other expenses once again.
• Laundry services – In the US the inspecting agencies like to see laundry service based hygiene practices but it isn’t required. The inspectors will likely not grade a producer down on uniforms as long as the clothes the employees match the uniform spirit (no blue jeans), are clean, and are changed on site.
• Energy use, power and light
• Long distance charges on secured and unsecured phone lines
• Packaging costs (if they are not part of the unit cost formula)
• Advertising and copy/printing costs
• Delivery/ transportation
• Water
• Insurance

I know of at least one bakery that stayed in business and is now thriving due to moving out of a municipality that over-regulated industry and waste handling. It found another that allowed more flexibility and lower cost in waste disposal.

IV Take a look at labor

Take a good look at your people, and ensure your team is fully enabled. Are your employees looking stifled, or waiting for something to happen? You need their know how and extra effort during difficult times; there are ways of harnessing the group’s effort that are win-win. Look at what other companies have done in this area. The Internet and the bookstore can help.  Both your customer facing employees and production people hold keys. Make the most of this situation. You can also look at a softening labor market, and consider: if you are paying out a lot of overtime, is now the time to bring in part timers? What percentage of labor is overtime? Can this be cleaned up? With the labor market in mind, can you afford to bring in and train part time staff?

Costs of poorly trained employees generally outweigh the cost of some structured training, especially with mid level management or shift-leaders. Remember the saying, “the only thing worse than training employees who then leave is not training employees who stay”. The value of increased efficiencies and/or outputs can be far greater than the cost of targeted training and/or bonus/incentive programs in general or isolated circumstances. This especially applies to influential employees such as shift supervisors and middle management.

Page 5 of 6 pages for this article « First  <  3 4 5 6 >

(0) Comments • Permalink • 11 19 2008

• Dan Ettling
• 8 ball shifter photo by flattop341
• Calculator photo by Kurt Nordstrom
• Magnifying glass photo by Andy Beatty
• Trader Joe's shelf photo by Shaners Becker
• Waste photo by hipsxhearts

The opinions represented on this site do not necessarily reflect those of the site owner. No warranty is implied.