Operational Levers – Your Moves For Improved Financial Performance

How good is your operational data? Are you flying the plane and building it at the same time, or do you feel like you have a good handle on your performance? Let’s start with your gross margin and the levers you can use to improve it – note: if your numbers are right where you want them to be, you can stop reading.

The goal should be to be as efficient and productive as you can be, with the work that you have. Our industry has a mix of companies, some that produce spot work and having a one-week backlog can seem like a dream. There are others with monthly, repeatable business that operate more like a manufacturer and can look months ahead to plan for improvements. Whichever end of the spectrum you find yourself, from an operations standpoint, you must protect the gross margin of the business.

While you may not be able to control the flow of sales and pricing levels and the equipment you have at the moment, you must manage the complement of people you have, their productivity, the workflow, and throughput to maximize your gross margin levels. The question that you should ask is: Do you have the right people in the right spots at the right times? I often see businesses with too many people, some in the wrong jobs, and not fully optimized to get the work out. Depending on the level of operational data you are receiving, it may be difficult to fully grasp “is everyone busy,” without resorting to only using your gut instinct. Are they busy for the entire shift or would you be better off sliding the start and end times of a portion of your staff to coincide with the busy times throughout the day? Again, it’s about having the staff in place for when you need them.

What does productivity and throughput look like? Not just how fast are they running but what are they yielding and how does it compare with what you’re getting paid for the job? Take a close look at this if it’s not where you need it to be determine if it’s an attitude or aptitude issue, or maybe it’s an equipment issue or poor or misleading job information. Regardless of the cause, you need to fix it so that your folks can run to the potential of your operation and yield the results you expect, deserve, and are getting paid for.

While this is not a study on workflow excellence, I will mention that workflow — the sequence of how things happen, the number of “touches” on each job, and the amount of time a job sits idle waiting for the next operation can be margin killers. A process map can be a good exercise and enlighten the team that the way you are doing things may be the result of a steady stream of changes, policy addendums, and procedures that were more relevant at another time. Review your workflow and look for inefficiencies and bottlenecks. Correcting these issues will impact the gross margin in a positive way.

Whether you are a new CEO or COO, or a seasoned professional, reviewing these areas should be an ongoing exercise. Protecting your gross margin is a result of producing the work that you have in the most productive way, all the while meeting the needs and expectations of your customers. No easy task, but that’s what you signed up for. How are you protecting your margins and what information do you use to help drive those important decisions – send me a note or leave a comment.

Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to owners and CEOs in the Graphic Communications Industry by providing direct and realistic assessments, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at mphilie@philiegroup.com.