Rapid Profit Improvement (Series Post no. 7)
Continuing with our series of Weekly Rapid Improvement posts.
Case Study No. 7 – $2.5M Manufacturer with low Gross Margins
The Business Owner asked us what we thought were the main causes of his low Gross Margin. Included in our first two answers was “rework”. The Business Owner agreed and confided that, although he hadn’t identified where it was actually happening, he estimated his rework to be around 20%.
There were no written processes, so we documented his manufacturing processes, using information gained from our Rapid Profit Radar Diagnostic to both reduce and report on his business’s rework.
The new processes reduced his rework to approximately 3% and not only increased his Gross Margin from 28% to 36% (approximately $200k) but also increased his capacity to do more work from the improved productivity.
We always run a Zero-Risk policy with our customers… No Profit Improvement – No Fees.
For more information on creating or improving a business model please call John on (021) 625-871, and further more information please visit Into the Blue.
