785.271.5816 | info@fsea.com

Special Focus

Sometimes the Easiest Way to Increase Sales and your Bottom Line is RIght Under your Nose

by Mark Porter

May-June, 2003
In tough economic periods, like those we have experienced over the last couple of years, you spend a great deal of time trying to determine new products you can offer to existing customers and different ways you can attract new customers. Both these tasks can be very frustrating because your existing clients and new prospects are likely to be experiencing the same uncertain economic times and are reluctant to spend more money.

There are significant increases in sales and profit to be had by simply taking control of your own business in the following ways:

  1. Determine the True Costs of Running your Business
  2. Increase Revenue from Existing Clients
  3. Maximize Efficiency and Reduce Waste
  4. Eliminate Mistakes that turn Good Jobs into Bad

Determine the True Costs of Running your Business
I have discussed this in previous articles. It is vital that you know what your true costs are so that you can know what your profits will be on each job. This will allow you to determine which jobs to aggressively seek and which jobs to refuse. Budget Hourly Rate software is available that will help you determine the true cost of each machine and productivity analysis software to determine the true speeds and times achieved by your equipment. These true costs and standards can then be used in an estimating system that will determine the true cost of each quote you produce.

Increase Revenue from Existing Clients
Of your total sales, how much is created by changes to the original job specifications you received from the client? Every print finisher experiences these changes. The estimate was to ship bulk in cartons and now the client wants to shrink wrap in 50’s. The management of these changes can have a significant effect on your bottom line.

The nature of today’s business is to focus on quality and delivery time, causing companies to often miss many legitimate extra charges. These charges add up very quickly. Let’s say you have $2,000,000 in sales and that 15% of your work is for changes to the original order. That represents $300,000 in sales if we tracked and re-billed every legitimate extra charge. If you are only managing to capture 50% of those charges that results in 50% being left on the table. At 50% on $300,000, this is a significant sum of $150,000 or 7.5% of your company’s total sales.

Finishers must start to approach their business more like house builders. A house builder does not begin the job before having a very detailed blueprint and agreement on costs. Any deviations from the original blueprint are OK’d by the client and re-billed.

The most effective way to accomplish this is through an order entry system. By computerizing your order entry process, you can have the ability to lock in the original job specifications for the order. As the job is processed and changes are requested, the order entry software will date, time, employee and reason stamp the change. The system will automatically generate a “change order form” that can be faxed to the client for his approval. The changes and their related information are printed immediately at the job’s closing to be included on the initial invoice to the client. Your success in collecting these legitimate extra charges will be very high because you will have the backup information in print.

Maximize Efficiency and Reduce Waste
The easiest way to maximize efficiency and reduce waste is to make people accountable for the time and materials they use. If an employee knows that he can be questioned on the length of time it took to perform a task or the amount of material that he used to produce a job and he knows that he will be compared to other employees performing the same tasks, he cannot help but be more efficient. This theory holds true at any level of employment from the general maintenance person right up to the president.

The benefits of accountability are tremendous. Even a small 5% increase in productivity at the same print finisher with $2,000,000 in sales, and therefore approximately $1,800,000 in time and material flowing through the plant, will save $90,000.

By placing computers out on the plant floor, you provide the employees with the ability to enter every minute of their day and every piece of material used on every job. And because you place computers on the plant floor you can also send information out to the plant employees to ensure that jobs are produced properly. An electronic image of the order allows the plant employee to have access to last minute changes and detail job explanations the second they are entered. By empowering your production workers with new technology you can greatly increase productivity and profits.

Eliminate Mistakes that Turn Good Jobs into Bad
Nothing is more frustrating than receiving the bid on a nice job and then losing money on it due to preventable mistakes. Last minute changes that don’t make it onto the job jacket in time or changes that are not documented on all the various copies of the order in production are examples of what can happen. Technology today can help prevent the costly mistakes with applications in the following areas:

  1. Electronic Order Entry
  2. Customer Profiling
  3. Job Notes
  4. Problem History

Electronic Order Entry
Although we will probably never get rid of the physical job bag because it holds proofs and samples, we are ready to eliminate the paper copy used to get the production information from the office to the plant. The plant should be using the electronic version of the order. This ensures that all employees will have access to the job information at all times. The information on the electronic version will always be the most current information. Any changes made in the office or elsewhere in the plant will automatically be reflected to all employees. The employees eliminate the loss of valuable production time by not having to search for a copy of the order. Plus the electronic order will be linked to the job notes, customer profile and problem history for each specific job.

Customer Profiling
Customer Profiling allows you to enter all details specific to a customer, including production details, shipping details, even how the president takes his coffee. Any piece of information that will ensure that you produce the customers’ work to their exact specifications should be entered. This information is available to all employees at all stages of administration and production. You no longer have to rely on one employee’s intimate knowledge of a customer or that all employees have to reference a binder that can never be found. The Customer Profile is immediately available 24 hours a day, 7 days a week.

Job Notes
No longer worrying about abbreviating detailed job notes to fit in a small description area on the order. A description that is missing key data or uses acronyms that nobody can understand will only lead to costly mistakes. Software allows you to attach electronic notes to an order and automatically warns anybody looking at the order that there are further notes to be entered. With plenty of space to enter full descriptions and the automatic notes warning system, there is no way an employee can miss vital information that will determine your success on a job.

Problem History
As the old saying goes, “Your not a fool for making a mistake - only the same mistake twice.” Making preventable mistakes must be the most frustrating way to lose money. If you are not recording and attaching problems to jobs and flagging those jobs when you re-run them, then you are simply asking for trouble. Again the benefit of technology is to enter information once and then distribute it very quickly to all areas where it may be required. As plant employees experience problems, they can document them in the information system. The software will then attach the problem to the job, enter it into a database of problems and solutions and will display the problem when you analyze your Actual Costs vs. Estimate Costs report.

Automating your facility with the proper software and hardware can save literally thousands of dollars on the bottom line through helping you know your true costs and properly managing your employees and production time.

Mark Porter is President of Dienamic Software MIS. He can be reached at (905) 688-5593 or visit: www.dienamicmis.com.