Reduce Waste, Maximize Profits

What if an additional 17% or more of your current gross revenues dropped to your bottom line?

Studies show that waste in most American companies totals 20%+ of gross revenues, yet waste in companies using the Deming management method average 3% - or less. How can this be? Answer: There is a better, more profitable way of operating any business: The Deming Quality Method.

Major Sources of Waste* and Lost Revenue include:
___ Poor communication.
___ Insufficient/incorrect planning.
___ Insufficient/incorrect training methods.
___ High employee turnover/low teamwork.
___ Time: Lost, poorly managed, etc.
___ Under-utilization of people’s skills & abilities.
___ High customer turnover/dissatisfaction.
___ Inventory: Excess & over production.
___ Product or service defects.
___ Transportation/processing Waste.
___ Waste of motion/effort.
___ Superficial quick fixes vs. removing root causes.
___ Lost opportunities (sales, growth, etc.)
___ Lack of clear company values and/or vision.

The Bottom line: The waste in most companies is HUGE, yet the obvious waste is invariably just the “tip of the iceberg.” Unless intelligent systems are in place to identify and eliminate the waste, it continues to be an invisible and growing major source of loss. Businesses utilizing the proven Deming management method (e.g. Toyota, Proctor & Gamble, Harley-Davidson) inevitably out-perform their competition, dominate their markets and enjoy healthy, growing profits.

Leadership Alliance provides real solutions to identify the waste and remove its root causes. Results: Major, increasing improvements in your organization’s productivity and profitability. In fact, removing waste can add proportionally far more to actual bottom-line profitability than increasing sales - a surprise to many in our “sell-sell-sell” world.

The Alliance offers comprehensive waste analysis and reduction expertise which pinpoints the greatest opportunities for waste reduction/profit enhancement in your organization. We design customized, cost-effective approaches that remove the waste and lead to the achievement of your organization's top objectives. Greater market share, profitability, loyalty and success results.

*Key Waste Definitions:

“The difference between the way things are today, and the way they could be if every
action added value to the customer, and these Added-Value Actions worked perfectly:
No errors, no mistakes, no failures, no problems, no rework of any kind.”
-Leadership Alliance

“Anything other than the minimum amount of equipment, materials, parts, space and
worker's time which are absolutely essential to add value to the product and/or service.”
-Toyota Motor Co

Reducing Waste vs. Increasing Sales

If your company sells a product or service with a 20% net before-tax profit margin (after product cost, salaries, commissions, overhead, etc.), then $1,000 in sales produces $200 in profit. A 10% increase in sales increases profit by $20, while a 10% reduction in costs/waste saves $80 (total costs: $800 x 10% = $80). This is four times as much.

Thus, at a 20% net profit margin, a reduction in waste/cost of only 2.5% will produce as much profit as a 10% increase in sales. The smaller your net profit margin, the more dramatic the impact a reduction in costs/removal of waste has on your bottom line (vs. increasing sales). For example:

• At a 10% net profit margin, a 10% reduction in waste adds nine times
as much to your bottom line as a 10% increase in sales:

A company operating at a 10% net creates $100 in profit from every $1,000 in sales; a 10% increase in sales adds $10 to the bottom line; a 10% decrease in waste [.10 x $900] adds $90 to the bottom line: Nine times as much.

• At a 5% net profit margin, a 10% reduction in waste adds nineteen times
as much to your bottom line as a 10% increase in sales:

A company operating at a 5% net creates $50 in profit for every $1,000 in sales; a 10% increase in sales adds $5 to the bottom line; a 10% decrease in waste [.10 x $950] adds $95 to the bottom line: Nineteen times as much.

KEY POINT: Removing waste, increasing quality and loyalty, improving efficiency, and reducing costs are among the most powerful investments you can make to increase your bottom line - and invariably leads to greater sales and market leadership.

The basic method to remove waste in any business system is to work cooperatively on: (1) How to correctly measure and optimize each process in the system and (2) How to reduce variation and/or cycle time (simplify, combine, or eliminate). This applies to both operating and management systems; e.g. in one year Toyota's employee suggestion program generated over 1.5 million suggestions on how to remove waste; over 94% of these suggestions were adopted.

FACTS:
• The Waste in most organizations is huge, yet largely invisible.
• WASTE ALWAYS EQUALS LOST REVENUE.
• There are proven methods for reducing Waste in all organizations.
• Organizations that practice smart waste reduction and continuous quality improvement are invariably more productive and profitable - they also invariably become successful market leaders.