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PKF Texas – The Entrepreneur’s Playbook™: Waste Elimination to Increase Profitability

by | Jun 13, 2008 | PKF Texas - The Entrepreneur's Playbook®

Note: Running Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.

Waste elimination is one of the most effective ways to increase profitability in businesses. To eliminate waste it is important to fully understand exactly what waste is and where it can be found.

There are six common causes of waste in an organization. They are:

  • Overproduction – You’ve heard of ‘Just in Time’, well overproduction the result of ‘Just in Case.’
  • Waiting is a cause of waste when the material flow is poor, production runs too long or the distances between work centers are too great.
  • When transporting goods, there is an opportunity for damage/loss to occur and quality to deteriorate.
  • Inappropriate Processing – Are you using the right tool/process for the job?
  • Unnecessary inventory will occur as a direct result of overproduction and waiting.
  • Defects – They cost money either now or later and their costs come directly from the bottom line.

Audit each of the issues and estimate the cost to your company of each waste. Then use a Force Field Analysis to make a plan to address each area. The Force Field Analysis process was detailed in an earlier EP from June 2007. 

If would like a full white paper detailing the Force Field Analysis, send me an email to gregshead@pkftexas.com

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