The current unemployment rate continues to lower and is at 4%. With the struggle to get skilled workers you need to hang onto the ones you have. Still cutting costs is always a priority for the lower margin food business. We’re going to dust off the archives again to take another look.

Too few people chasing too many jobs. That is a story we haven’t heard for 18 years. With the unemployment rate at 4%, and many choices of where people will work out there, it is a challenge for all businesses to hire, not just the food guys.  As Jeff Cox from CNBC news reported:

The U.S. labor shortage is reaching a critical point

  • Private payrolls grew less than expected in June, likely due not just to a slowdown in hiring but also a decline in the labor pool.

  • For the first time, there are more job openings than there are eligible workers to fill them.

  • Economists expect wage pressures to continue building as part of increasing inflation.

Truck drivers making $86,000 a year and welders making $100,000/yr makes keeping workers critical in today’s heated economy.  So let’s see how you can get more out of your business without reducing employee counts and costs. Not a new idea but it does require a new approach.  We'll identify a few target areas:

Purchasing and Receiving

  • Examine Freight Billings
    Freight is a huge expense that a lot of distributors overlook. Effective forecasting of product demand will allow you to buy smarter and in bigger quantities allowing for more room for negotiating and leveraging your existing vendors.

  • Hold Suppliers Accountable for Errors
    Supply chain errors are a black hole of lost money, Dr. Don Rice of Don Rice & Associates feels that 25% of time spent in the purchasing Dept. is tracking errors. "In 2 out of every 100 invoice lines there is an error."
    Editors note: The flip side of that may be true. Make sure your billing error rate isn't that high, especially my variable weight friends.

Inventory Optimization

  • Aggressively Purge Slow Moving Items
    Reduce the number of items added to your stock. Unless they have a proven sales track record  they don't belong.

  • Reduce Overhead Costs for Fast Moving Items
    Identify the true cost of carrying of items and work to increase turns.  Remember our Turn and Earn Index of items from issue #631?  Develop a selling strategy to maximize your return on dollars.

Order Administration:

  • Hold Salespeople Accountable for Orders
    Having salesman calling, faxing, or e-mailing their orders in is not just old school it puts the responsibility of getting the order correct on in-house people spending valuable labor $’s chasing after salesmen or worse yet getting the order incorrect.

We have been talking to a flood of customers and prospects who want to automate key business processes.  It is not unusual to be paying the office clerk $15 to $20 dollars an hour hour to support salespeople or investigate purchase order issues.  In spite of this businesses under $50,000,000 in sales rarely (less than 30%) have purchasing and order entry automation. 

If 25% of your purchasing time is tracking errors, and a portion of your office staff time is supporting salesperson errors, can you imagine what it costs you labor wise to chase those errors. Looking at ROI, Return on Investment, is easy if you save 6 hours a week at
Week: $20/hr. = $120
Month= $600

If you can effectively put a system in for less than $600 a month that’s more money in your pocket and more productive people. You don’t want to reduce people you want to deploy them in more money making activities.

In meeting with my new CEO at CAI he wants us to focus on what value we bring to you, cutting labor costs and redirecting that labor just makes sense.

HAVE YOU LOOKED AT YOUR ROI?


 

 

 

 

 

Issue 646 - Checking those Resolutions.

Last year we were early to declare our New Years Resolutions 2018. A lot has changed over in 2018, but I believe it's not quite too late to make sure we have addressed some of those resolutions.

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