Benchmarking

Once you've got your business going and your satisfied customers are making your business volume increase steadily, you often find there's something seriously wrong: you're doing more business but you're not making more money. This is very common because, as your business grows, the things that worked when you were very small tend not to work very well as you grow. Inefficiencies pile up and eat up profits. Unless you do something, you're going to grow right into losing money.

What you're looking for is better ways of doing things, ways that result in higher quality with lower cost and which are more efficient. One way to find these is to look at other businesses which are doing the same things and find common benchmarks, i.e. statistics which measure how efficiently a process is carried out.

If you use bulk material in your manufacturing, find other companies which use bulk material and ask them how they order, how they receive it, how they store it and how it is handled and moved. Then ask how much time and how much labour it takes. Once you have this data for several companies you'll have a pretty good idea what would be reasonable for your operation and then you can compare to see how you're doing.

Finally, the aim is to be as good as the best company you've found. When you approach that level you'll then start seeing substantial savings and increaed profitability.

FIRST PUBLISHED AT SUITE101.COM