There’s one surefire way to make your job shop more profitable this year – by becoming more efficient. Eliminating waste and getting more production out of your team is a guaranteed formula for increased profitability. Greater efficiency is easier said than done, though. That’s especially true when you’re juggling a wide range of customer demands and deadlines. How do you become more efficient when you’re customizing jobs on every order? Can you be efficient when there’s no standard product? The short answer is yes, you can. Here are three big tips that will help you achieve a greater level of efficiency and profitability.
Recognize the value of your labor.
Want to find the greatest single source of inefficiency in your job shop? You may need to look no further than all of your employees out on the floor. No, we don’t mean that your team is a waste of money. However, it is possible that the way they spend their time is a waste of money.
How much time do your floor employees spend “looking for something”? Maybe it’s a tool or a job template. Maybe it’s a traveler for a specific job. While each employee may only spend a few minutes a day “looking around,” the problem is that all that looking adds up. If you have a big shop, you may lose hours a day to employees looking around for tools, templates, and more.
There’s a simple solution, but many shops resist it because it involves some upfront investment. Simply get rid of the tool bin in the middle of the shop. Instead, create tool stations that are specific to different work groups. Try to keep all tools within arm’s reach or at least a couple steps of each worker.
Yes, this may require you to buy more tools. However, consider the cost of all that looking. Say your team averages pay of $20 per hour. Let’s say that they collectively spend an hour a day walking around and looking for stuff. That’s $20 per day you’re losing. With 220 business days in a year, that’s $4,400 in lost earnings. In that light, a one-time purchase of some extra tools should seem like a no-brainer.
Invest in training and educating your team.
In many job shops, employee training begins and ends with an employee’s first few days on the job. When there’s not regular training, employees can develop their own solutions and form their own habits. The problem with that is that what may make sense to your employees on the floor may not align with your goals and processes.
The best way to keep employees aligned with your process is to train them regularly. Organize a formal, ongoing training series. Bring in vendors and machine manufacturers to give training on their specific products. You can even ask your senior employees to lead some of the sessions.
There’s another big benefit to training. Your floor workers are on the front lines of your process. They’re in the best position to notice inefficiencies and to recommend solutions. When you train them, you’re making them more informed so they can notice these inefficiencies. Your workers may alert you to efficiency issues that you never even knew existed.
Make decisions based on data and facts.
A lot of shop owners and managers make decisions on the fly. In some cases, that’s the only option. You may be up against a pressing deadline and just need to get the job done. In other instances, though, there’s no reason not to consider the data behind the decision.
Do you know how much each job costs your shop? Do you know whether you’re pricing correctly and if you’re turning a profit on each job? Do you know what margins you need to cover your overhead? How about how much time your team can spend on certain jobs?
An ERP system can give you this information. Once you have the information you need, you can stop making important decisions based on your gut. Quoting jobs shouldn’t be a guessing game. Scheduling shouldn’t be based on intuition or feel. Having a robust ERP solution can give you the facts you need to make the best decisions for your shop.
Identifying and resolving inefficiencies is one of the most effective ways to grow your bottom line. These three steps can help you get started. You may also want to sit down with your team leads and walk through all of your processes. Doing a “process audit” may help you better understand where inefficiencies lie and how you can resolve them.