It is the first day of summer and a sticky 90 degrees. As I look at what I’ve learned over the years I thought we would start a series of summer reminders by looking at some old Newsletters and making sure we keep you folks up to date on subjects that never get old. Now let’s look back to 2007 and look at best practices.

Are you at your best?

As we look at modernizing our best practices please remember “repeatable best practices” is the best way to save money. Please refer to one of our customers who increased their margin % by repeating their best practices.

Working with Best Business Practices

"Best Practice is a management idea which asserts that there is a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome than any other technique, method, process, etc. The idea is that with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications. Best practices can also be defined as the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people." – Wikipedia

The idea of a Best Practice is simple, that there should be one best way to do one thing.
The idea of Best Business Practices is not so simple, as there is never a time in your business when you are only doing one thing.

What are Best Business Practices?

When we talk about Best Business Practices what we are doing is comparing your real world resources of people, processes and tools, to an ideal world where you have unlimited resources. A successful implementation of Best Business Practices involves finding the most beneficial balance between the ideal, your resources, and the unique qualities of your company. This balance point will become the Best Business Practices for your company.

How much will Best Business Practices Save?

This varies quite a bit from company to company. Our Thinking Inside the Box this week reviews some of the Best Practice Savings we've discussed in the past and how much they can individually save a company. Take a look and add up the ones that might fit into your business. Overall the average food distributor stands to save from 20-25% of the total operating costs by working towards Best Business Practices. Intense Best Business Practice plans like Six Sigma, TPS, and Lean Manufacturing can quote higher figures of 35-45% according to Thomas Pyzdek of The Six Sigma Handbook.

Why Doesn't Everyone Use All Best Practices?

In all of us we have a practical (logical) mind and a reactionary (emotional) mind. The logical mind provides us our options, but the emotions are what really drives our behavior

Here are some of the practical (Logical) reason companies give for not using Best Business Practices: No Budget, No Time, Lack of Knowledge, Wrong Personnel, Missing Technology, Lack of Training...

Here is the real (Emotional) reason:

It is uncomfortable to change.

In order to implement Best Business Practices you need to admit that you may be wrong, you need to evaluate what you are doing honestly, and you need to be willing to risk change. It is said that change comes when people are uncomfortable. You can wait until your business performance makes you so uncomfortable that you are forced to change, or you can work outside your comfort zone to grow your business and make it more profitable.

Thinking inside the box:

Best Practices Review

Reducing Shrink - Recover nearly 1% of your total revenues currently lost to shrink as profit.

Efficient Pallet Use - Save up to 80% of pallet costs and tons of waste each year.

Accurate Inventory Counts - Find between 4% to 7% of inventory value that average companies "lose."

Prevent Shipping Chargebacks - On average 2% to 10% of revenue generated from a customer is lost to chargebacks, learn to keep the money you earn.

Automate Order Entry - Increase the profitability of each sale by 4%

Clear out Dead Inventory - Recover a portion of the 110% cost of holding each piece of dead inventory.

Accurate Order Fulfillment - Turn 5% to 7% of total sales from cost to profit.

 

 

 

Issue 631 - Turn and Earn, we need a reminder.

Being that a lot of vacations are happening right now I thought it would be a good time to re-publish our turn and earn issue that we did back in 2005. Although it's an older News Letter it's one that shows you how good your inventory is doing from a profitability standpoint.

Read more ...