Cultivate Gains By Tackling Losses

One way that manufacturers and distributors can improve profitability is by calculating losses, specifically the costs that can be attributed to the manufacturing process.  Cost deployment is a method that can bring light to costs and losses, which can then be turned around to benefit your bottom line.

A successful business doesn’t solely focus on customers and profits.  Although calculated losses may be a part of doing business, not all losses are easily spotted.  As discussed in “Cost Deployment:  7 Steps to Better Process Understanding and World Class Manufacturing,” posted by Jason Piatt on IndustryWeek.com, part of a philosophy known as World Class Manufacturing (WCM) is learning how to strike the right balance between people, prompt response, asset utilization, and visibility of your business’s performance.  Part of attaining this balance, particularly the visibility, is performing cost deployment.

You can use cost deployment to evaluate real and estimated costs associated with your manufacturing processes by breaking down operations into smaller pieces.  With a thorough evaluation of your manufacturing operations, you should be able to spot losses and turn them into gains.  Piatt suggests using cost deployment to identify processing and transforming costs, identify qualitative losses and wastes, separate casual losses from resulting losses, and calculate each of those actual costs.  Then, you should have the insight needed to identify ways to stop and recover those wastes and losses.  Piatt points out that recovering losses may also have a cost, which is important to estimate when creating and implementing your improvement plan.

Performing a cost deployment evaluation can provide insight into ways to improve the productivity of your people, reallocate assets to provide added value, as well as reduce inefficient manufacturing activities, wasteful spending, and other losses.  Implementing an enterprise resource planning (ERP) solution can also provide valuable insight into your financial and manufacturing processes.  You can manage all of your core business operations from this single, integrated business management solution including financial and accounting activities, manufacturing and distribution operations, inventory and supply chain, and human resources and payroll.

Learn how you can improve your profits by tackling your losses.  Contact Sherwood Systems for more information about evaluating your business and financial activities and how ERP can provide the insight you need to reduce wastes and build profits.

By Sherwood Systems, Microsoft ERP and CRM Partner out of Arizona

About Sherwood Systems

Sherwood Systems is a Gold Certified Microsoft Dynamics Partner out of Phoenix, Arizona. Sherwood Systems is dedicated to providing Microsoft Dynamics GP and Microsoft Dynamics CRM (Customer Relationship Management) business management and accounting software solutions to small to midsize Nonprofit customers in Arizona, New Mexico and Nevada and in the Business Aviation (FBO) industry in North America. For more information please visit: http://www.sherwood.com/

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