Defend Your Business from Defects

Defend Your Business from Defects

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Alberta is in an unprecedented economic time. The impact of the COVID-19 crisis on the energy and other sectors is already rippling out, and individual businesses are facing a perfect storm of money-sucking problems.

We’re re-doing our “Deadly Waste” articles—and we’re taking it up a few notches to help you adapt to this storm. The cost-saving ideas in these articles may be uncomfortable, but growing pains can hurt even when we know it’s for the best. 

Defects—whether it’s an error in a file, a misdiagnosis, or a poorly built house—can cripple your business. On top of the cost of making it right with your client, your reputation takes a hit that will follow your business around. 

 

Be Careful What You Cut 

We’re all in cost-saving mode, and it’s easy for quality control to get caught up in the purge. But remember that your quality control process is what keeps annoying defects from becoming catastrophic. 

The people checking quality seem expendable until we realize they’re invaluable. Make sure not to cut corners with this step in your production cycle. The last thing your business needs now is to lose a customer over an avoidable mistake.

 

Be Intrusive

The golden rule about defects is that the earlier in the process you catch them, the less expensive they are. It’s easy to assume everything about your production processes is fine, but in times like these, throw “fine” out the window.

Insert yourself into the process. Ask your people how it’s done, and get to know your inner-business operations as intimately as when you first helped build them. You’re not accusing anyone; you’re doing the due diligence that the situation demands.

Find out where people have taken liberties and “tweaked” the processes, then ascertain what impact changes have had on your overall flow. You have the 30,000-foot view: put it to good use to audit the process and root out defects. 

 

Empower Your Team  

Your team is as nervous as you are. They know what Alberta’s economy will be like for the next few years, and they want to go the extra mile to make sure their families will weather the storm.

The worst mistake you could make right now is to assume that you’re alone. Your staff have your back more than they ever have. Engage them. Get their thoughts on your existing quality control processes and talk with them openly about how to spot defects. 

 

Processes 

The importance of mapping your processes comes up repeatedly in our Deadly Waste lessons. Many “deadly wastes” arise when you, as the boss, aren’t clued in. Documented processes give you a window into what’s really going on.

With your process map in hand, find out where the defects are happening. Can you identify the stage at which they’re occurring? If there are multiple, is there a correlation? 

If you can trace the source of your defects, you can arrive quickly at a solution. Make a habit of being present—with your team, and throughout your production process—and you’ll breed a culture of high standards.

If you found this article helpful, browse our archive of COVID-19 resources. Keep checking back for news updates, tax advice, and business tips for keeping your business on-track through uncertain times. 

 

Is Your Product Costing You Money?

Is Your Product Costing You Money?

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Alberta is in an unprecedented economic time. The impact of the COVID-19 crisis on the energy and other sectors is already rippling out, and individual businesses are facing a perfect storm of money-sucking problems.

We’re re-doing our “Deadly Waste” articles—and we’re taking it up a few notches to help you adapt to this storm. The cost-saving ideas in these articles may be uncomfortable, but growing pains can hurt even when we know it’s for the best. We hope this helps.

Overproduction is the deadliest of the wastes. It takes away your ability to adapt and business and dovetails into multiple other wastes. 

It’s also one of the hardest to squelch successfully, but well worth the effort. It requires a long look at the products or services you’re offering and whether or not they’re the right ones, at the right time, for your customers.

 

Don’t Get Comfortable 

If you’re like most of us, a comfortable business position is now a thing of the past. But it’s not all bad: instability can make you adaptive, and adaptation is how you’ll survive. 

 

Overproduction is a waste that stems from getting too comfortable. It’s a waste that comes from the optimism of being so confident you’ll sell more, that you produce more. 

Comfort is expensive because it freezes your cash. Every widget you produce and extra material you order is a handful of cash that’s frozen until a customer thaws it out. If you take a loss on it or throw it away, it stays frozen.

As you know, cash represents a lot more than buying power. Cash represents the flexibility and the adaptability you’ll need to get through this. You’ll need all the cash you can get right now, and that means trimming back production to rock-reliable numbers. 

 

Do You Have to Push?

Overproduction happens when optimism leads to gambling on increased demand. That brings forward bigger batch sizes (which entice us with discounts on raw materials), and the cash freezes begin en masse.

Trying to “push” a product onto the market is a challenge during good times, and almost impossible during these times. The secret behind eliminating overproduction isn’t easy, and it’s not quick, but it is effective. It’s converting to a “pull” system.

If you have to push your product or service onto customers, it’s time to take a step back and try to recall the last time they actually asked for it. When was the last time they were enthusiastic about your offering? Or the last time someone asked you when they could expect a restock?

Are they in love with your product or service, or have they formed a habit? Habits, even necessary ones, are in danger of being replaced.

There’s never been a better time to think about your products and services in a new way. What will your customer love? To find out, you can ask them, you can infer from everything around you, and you can see what your in-house potentials are.

If you create or focus on a product or service that your customer loves, you won’t have to push it on them: they will pull it out of you. 

 

Time is Money

Overproduction is about more than building too many widgets. It’s the most capricious waste because it overlaps closely with so many others, and often quickly leads to over-inventory.

 

It’s also closely related to over-processing. Overproduction is running too many tests, too many iterations on a file, and putting excessive resources into a construction project.

Time eats as much cash as materials do. When the time gets excessive, the cash freezes into the product. Take a look at each of the individual products and services you’re offering and ask yourself, “if this were gone, would anyone miss it?”

Don’t Wait to Cut Waste

Don’t Wait to Cut Waste

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Alberta is in an unprecedented economic time. The impact of the COVID-19 crisis on the energy and other sectors is already rippling out, and individual businesses are facing a perfect storm of money-sucking problems.

We’re re-doing our “Deadly Waste” articles—but we’re taking it up a few notches to help business owners like you adapt to this storm. The cost-saving ideas in these articles may be uncomfortable, but growing pains can hurt even when we know it’s for the best. We hope this helps.

Waiting is the hidden waste. It’s the time/money spent sitting in lobbies, waiting for orders and files to get to us, and wondering when a client will return our calls. 

We’ve talked about cutting waiting waste before, but waiting out COVID-19 means that we can’t afford to wait out anything else unnecessarily. Here are some ideas for hacking away at this waste before it eats more of our profits:

 

It’s a Boss Thing 

The first step towards tackling “waiting” waste is taking a long look in the mirror. How much waiting waste happens with us, the leaders? How long do files sit on our desks and do our phone calls go unanswered?

It’s not exactly our fault. As bosses, we’re eager to get things done and, for the sake of pushing the needle as far as we can, we may take too much on. But often our minds are so preoccupied with big-picture issues that we lose control of everyday routines.

 

It may be our desks, voicemails, and inboxes that are racking up the waiting waste. The cure is being honest about it and making changes. If we know it’s going to continue, we need to delegate what we can and focus on what we do best. If we know adjusting our behaviour is all it takes to trim that waste, it’s in our best interests to do it.

 

Embrace the Digital 

The COVID-19 Crisis will change how our economy functions for years ahead. People will continue to work at home more, travel less, and increase the use of digital communication tools.

Knowing our digital tools gives us tremendous abilities to slash waiting waste. Here are a few key examples:

  • Instead of playing phone or email tag to bang out meeting times (virtual or not), a simple app like Doodle can get everyone to agree to the same meeting time.
  • Virtual meetings reduce travel time, waiting in the lobby time, and a host of other tiny wastes. Google Hangouts or Zoom are popular tools for video conferencing. By meeting virtually, we can work on other tasks while we wait for clients to log in. (Make sure to hit the mute button before you commence the noisy typing!)
  • Important documents can be signed online instead of using courier, mail, or other time-consuming methods. There are several tools available for signing documents electronically, including Adobe Acrobat. 

How Much Do You Need to Travel?

Travel is the granddaddy of all waiting wasters. From losing anywhere from a few hours to a full day’s productivity (each way!) to cab rides, hotel check-ins, and a list of other stand-in-line hours, travel often costs more than it brings in. And of course, this crisis has laid bare travel’s health risks. 

It’s time we laid out the real price of travel. Examining the cost of our recent business trips in terms of total expenditures and time loss can be a hard pill to swallow. However, if business travel isn’t offering a concrete return, we need to be honest about whether it’s worth it.

 

Timing Your Processes

Knowing your processes is the highway to efficiency. Other blogs in this series have mentioned the need to “whiteboard out” our processes to flush out redundancies, define roles, and empower our teams. 

In every business, there are interconnections of processes that files, products, or services move through like an electrical current. We have waiting waste when a link further down the chain is waiting for an earlier link to catch up.

We can cut that out by establishing a simple baseline of how long each part should take. This way, the team included in the later steps can plan accordingly. As a bonus, laying out a timeline will give everyone a metric for efficiency in their own roles. It might be just the change needed to build the urgency we’ve been looking for.

Tapping into Your Team’s Potential

Tapping into Your Team’s Potential

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Alberta is in an unprecedented economic time. The impact of the COVID-19 crisis on the energy and other sectors is already rippling out, and individual businesses are facing a perfect storm of money-sucking problems.

Over the next couple of months, we’re re-doing our “Deadly Waste” articles—but we’re taking it up a few notches to help you adapt to this storm. The cost-saving ideas in these articles may be uncomfortable, but growing pains can hurt even when we know it’s for the best. We hope this helps.

For many Alberta businesses, survival is in the hands of the team. We need to adapt fast, possibly changing policy or possibly changing business models entirely. Here are some thoughts about how you can make the most of your teams’ talent as you face the new opportunities and complications that COVID19 is creating:

 

Really Learn About Your Staff  

Chances are that the people on your team are surprising you right now. A few are stepping up to the challenge and tackling it head-on, and others are shrinking away and checking out. 

Crisis brings out characteristics that we would never see otherwise. We all deal with stress in different ways, and at times like this, certain people—perhaps whom you didn’t expect—will rise to the challenge to help you adapt and survive.

Watch for these people. Don’t expect the same employees to show up for work now the same way they showed up 2 months ago (or since you hired them). Stay open-minded and try to look at everyone with a blank slate. When you see someone rising to meet the crisis, react.

On the same note, you may see some hot-shots suddenly become a lot less helpful. That’s the flip side of the equation. It may not be intentional: our inner nature comes out during a crisis.

 

Who Will Help You Adapt

Sticking with the status quo won’t work for you right now. Your business needs to adapt fast. Watch for the team members who feel the urgency of the times and who are stepping up to challenges. Embrace their efforts. It’s not the time to overthink staffing decisions. It’s time to find those who will help our business survive and deputize them. 

 

Watch for Burnout 

Survival is hard right now. You’re adapting fast, firing out policy changes and changes in procedures like a Tommy gun, and there’s a lot of adrenaline fueling your management team right now. 

If burnout hits your staff, your ability to adapt grinds to a halt. You need them at their fighting best, so take care of them.

 

Hiring/Firing 

Let’s be blunt: it’s an employers’ market and will be for some time. Finding and training new people is expensive, but a staff member who’s anchoring the team to lost ground potentially carries a higher price tag. 

Now more than ever, it’s important to get your head around what you need for your people. Be clear and transparent about what your expectations are for your team. If your employees’ job descriptions need to change, tell them. If you need them to do things differently, let them know. With the right team in place, you’ll be better positioned to adapt and change with whatever comes next.

Stay Liquid to Stay Afloat

Stay Liquid to Stay Afloat

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Alberta is in an unprecedented economic time. The impact of the COVID-19 crisis on the energy and other sectors is already rippling out, and individual businesses are facing a perfect storm of money-sucking problems.

We talk a lot about how to cut the deadly wastes to save money. Over the next couple of months, we’re re-doing our “Deadly Waste” articles—but we’re taking it up a few notches to help you adapt to this storm.

The cost-saving ideas in these articles may be uncomfortable, but growing pains can hurt even when we know it’s for the best. We hope this helps.

It feels reassuring to carry enough inventory to last a while. You can relax about not having to scramble to source the next shipment if an order comes in. 

However, excessive inventory also ties up our cash flow more than any other Deadly Waste. Every piece of inventory, whether it’s to resell, manufacture, or use in-house is an ice-cube with your money frozen inside. The only way to thaw it and get at the cash is to sell it. 

Times like these aren’t comfortable, and they aren’t the times to sit on a hoard of inventory like a dragon on its gold. Now is the time to have as much liquid cash as possible.

 

Find Old Inventory 

We know the places in our businesses where inventory goes to die. It could be the back corner of a warehouse, a trailer at the end of the worksite, or a closet down the hall. 

Hunt down those places. Walk every step of your business and discover the materials you had forgotten you had. If they’re consumer goods, you can sell them at a discount. If they’re usable goods, go ahead and get them into your pipeline. 

Chances are, you paid for that inventory a year or more ago, so any cash you can pull out of them now is a bonus. Think of it like finding a 20 in your pocket. 

This is the time to scour the grounds of our businesses for any help they can give us. An empty shelf that has injected a little more liquidity into circulation is always better than a full one. 

 

Negotiate 

You’re not the only one hurting. The economic pain that Alberta is feeling now is near-universal. That means consumers are buying less, and wholesalers are selling less.

Remember that we’re all in this together, and you’re not the only one in survival mode. Few are aiming for big profits anymore; we’re all just trying to clear some inventory and struggle our way to liquidity. 

 

Close to the Rocks

It’s the time not just to be close to the rocks, but for your rudder to be inches away from them. Reduce your shipment sizes and bring them in more frequently if you need to. Stay as liquid as possible.

If you manufacture, it’s the ideal time to switch from a “push” to a “pull” system, so you’re not producing what might not sell. The trajectory of where this crisis is going to lead us is still unfolding, so caution is the safest road. 

While you’re at it, look at how you can streamline the process of manufacturing that widget or processing that file. Is there anything you’re doing that doesn’t need to be done? Any cinch to the flow will make it easier to flip to a pull system, which, in turn, will help keep your inventory in check.

 

3 Ways to Cut Your Transportation Costs

3 Ways to Cut Your Transportation Costs

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“It is not the strongest or most intelligent who will survive but those who can best manage change.” – Charles Darwin

Alberta is in an unprecedented economic time. The impact of the COVID-19 crisis on the energy and other sectors is already rippling out, and individual businesses are facing a perfect storm of money-sucking problems.

We talk a lot about how to cut the deadly wastes to save money. Over the next couple of months, we’re re-doing our “Deadly Waste” articles, only we’re taking it up a few notches in order to be your partner in adapting to this storm.

The cost-saving ideas in these articles may be uncomfortable, but growing pains can hurt even when we know it’s for the best. We hope this helps.

Transportation costs can creep up in the shadows. We often don’t factor all of them in, and we rarely use these expenses in our negotiations even though third party transportation costs can be quite flexible. 

It’s time to zero in on all the costs we can cut back, comfortable or not. 

 

Your Vehicles 

Company vehicles are crucial to daily business, but it’s not business-as-usual right now. Whether you have 1 or 100 vehicles, it’s time to consider what role they’ll play in the challenging times ahead.

Your first instinct may be to sell them, and as a last resort you could. But vehicles are terrible investments and, especially in a climate like this, you won’t get much for them. You’ll also need to spend a lot more to replace them once things pick back up, and they will. Hold onto your wheels if you can.

We often forget about insurance, but it’s expensive overhead. Make a projection for how much you’ll need for your fleet and cancel insurance accordingly.

It sounds counter-intuitive, but keep investing in daily maintenance. This is not the time to have to haul company vehicles into the shop for expensive fixes. 

Also, check periodically on any vehicles you’ve pulled insurance from and parked. Run them weekly and perform general maintenance (making sure they’re on your property, of course). 

Yes, gas is cheaper. But for most businesses that cost savings will be insignificant, and typically not something we want to be reminded of.

 

Your Vendors

When you hurt, your vendors hurt. They will also understand that revenue and margins are not what they used to be.

Transport costs are a favourite bargaining chip. Buy more, and freight goes down. Buy more than that and it’s free. It’s time to negotiate with your vendors on this. Be respectful but also frank about your reality. Many vendors will bring those rates down.

If you’ve gotten better deals by taking larger shipments from farther away, negotiate that. Most importers have warehouses, and most warehouses are fuller than they should be because of economic pain. Do what you can to leverage our new reality.

 

Car Allowances 

Senior management often enjoy this as a perk, essentially being reimbursed for kilometres travelled for work. Clicks are tallied to and from businesses lunches, client visits, etc.

But lunches and client visits aren’t happening now. And those managers may be working from home. So do those allowances really make sense?  Are they, in fact, justifiable if there are negligible kilometres travelled. 

You will, of course, get push back on this. But these cuts aren’t meant to be comfortable; they’re meant to help you adapt and stay alive. 

The “adapt and survive” mantra may frame business over the next year or more in Alberta. We’re here to help you get ruthless with your waste: it’s the best way that we know to keep your lights on in times like these.