6 Strategies to Reduce Production Costs

For any business, waste strains profitability. Waste can come in the form of time, resources and labor; it shows up through poor process planning, inventory imbalance, or poor warehouse layout. Essentially, waste is any expense or effort that does not transform raw material into a finished product. By optimizing processes and eliminating waste, businesses can add value to each phase of production.

One way to improve profitability is to reduce production costs. Production costs are the costs incurred in manufacturing a product or providing a service. These can include expenses such as raw materials, labor, suppliers and general overhead.

Consider these six ways to reduce production costs:

1. Track your costs

To begin with you need to ensure you’re tracking your costs — you can’t change what you don’t measure. The first step is to identify all operating costs and understand which costs have increased. Decide the intervals for tracking key information to help you make informed decisions about manufacturing cost reduction.

2. Eliminate bottlenecks and redundancies

Analyze each stage of your production process: is each activity required? Does it add value? You should also consult the relevant employees to find out what steps in the process are not adding value, redundant, or interrupt their workflow. Drop non-value-adding activities to cut out unnecessary costs.

3. Tighten your inventory control

Optimal inventory control means you hold the right quantity of stock so you’re not stuck with excess inventory that costs money to store, insure and can go to waste; but neither are you caught short by stock-outs.

4. Improve employee engagement

Engaged employees means lower staff turnover, which in turn leads to reduced labor costs. Engaged staff are also more effective and productive. This means you should:

·        Hire the right people

·        Provide training

·        Offer appropriate incentives

·        Share clear production goals

5. Embrace automation

Review your process to see where you can use automation to boost efficiency. Simplify the manufacturing process with automation so you can save time, make the best use of resources, ensure consistent product quality and more. Before investing in an automated system, make sure that it will meet your business needs and has flexible integration capabilities.

6. Negotiate with suppliers

Another way you can save your manufacturing costs is to ask your suppliers to reduce their prices. The first step in this process is to build genuine relationships with your suppliers. Once you’ve built a rapport, negotiating money is less uncomfortable.

Already have a good relationship with your supplier? You’ll be better placed to negotiate for discounted prices. Consider:

·        Signing a long-term contract with your top suppliers

·        Offering cash payment in return for discounts

·        Asking for a turnover discount at the end of a financial year if you’ve contributed significantly to their business

Saving on operational costs is one of the biggest goals for manufacturing companies. Most manufacturers look to streamline systems, reduce production costs, and increase profitability without sacrificing product quality. Often, the quickest and easiest way to cut costs is by accepting minimum quality levels or reducing employees. This can lead to increased product returns, warranty claims, and loss of a loyal client base that will probably increase costs in the future.

Reducing manufacturing costs is important regardless of the company size or the type of products manufactured. Estimating the cost of production is essential to manage cash flow and eliminate unnecessary spending. Reducing production costs results in more available money to innovate, grow, or save for contingencies.

Businesses have the option to lower prices and pass on their production cost savings to customers. Lower prices can increase the demand for products, resulting in more sales. The company can also offer staff bonuses or an increase in pay to improve employee satisfaction levels.

5 Ways to Engage Your Managers

There are numerous studies on the relationship between managers and employees regarding engagement. It is quite notable that most of the google searches focus on employee engagement. Or on what a manager can do to increase employee engagement.

But what about the managers? What if they are disengaged?

According to the Gallup Business Journal, 70% of the variance in team engagement across business units is explained by the quality of the manager. In other words, engagement is a management issue.

And this makes sense. Employees naturally gauge their connection and engagement with an organization through their local relationships and environments. And no one has a greater influence on those day-to-day interactions, processes, and operations than the managers on the ground with them.

Great leaders show their employees what they need to do, both to succeed in the business and help the business succeed. Engaging managers are highly motivated, efficient, collaborative and, most importantly, nurture engaged employees. 80% of employees with a higher level of trust in their management are more committed to the business. Engaged managers understand they represent their company and its values, and are committed to achieving any objectives that align with those.

Organizations need to understand what managers are doing in the workplace- build or break the engagement.

Many of the techniques that boost employee engagement often work for managers too. Thus, instead of firing your disengaged managers, look at the following methods of engaging managers.

1. Improve Communication and Growth and Development Opportunities.

The majority of managers will never accept that they are bad communicators. We take communication skills in managers for granted.

And for a manager, it might be a little humiliating to be advised to get some training to develop their necessary communication skills. However, communication training is a great option to improve their expertise.

But, it is not just for their communication skills. Managers need overall growth and development opportunities, provided these options to promote loyalty, and generate motivation.

2. Practice Empathy with them.

The key to cultivating managers' quality and improving their engagement with the organization is to show empathy for them. We often provide empathy training and urge the managers to practice it. But unless we understand the hardship of managers, the initiative would fall on deaf ears.

Thus, we should aim to instill empathy in managers by exercising compassion with them. We should seek managerial feedback and learn from mistakes while keeping confidence in the business.

3. Foster Engagement through Collaboration.

Collaborating managers are the first to be selected for intricate tasks requiring inter-departmental teamwork. Thus, instilling collaborative and engagement skills in managers is essential.

Again, collaboration and engagement are practically synonyms. So a perfect way to promote engagement is to collaborate with managers.

4. Build Transparency.

There are times when it is not possible to reveal any corporate strategies. But unless it causes any security issue, you should be as transparent as possible with your managers. You should explain why you cannot reveal some data at present. We should share the targets, objectives, and current performance reviews of the company with the managers.

5. Create a Culture of Recognition.

The longer managers take to recognize team members, the less likely employees will recognize them as engaged managers. Thus, it is a two-way process. To get recognized, managers should first learn the art of recognizing their engaged employees. On the other hand, employees should recognize managers for everything positive they do in the workplace.

Managers are often saddled with the task of raising engagement rates among their teams by senior leadership. After all, leaders often assume those managers know their teams best and have such a strong impact on the daily employee experience - shouldn't they be accountable for engagement?

But since such a small portion of managers are engaged themselves (just 35% according to this Gallup survey), asking them to take on the task of engaging employees when they're disengaged doesn't set anyone up for success.

Instead, it's better to raise the engagement levels of managers themselves if you have a significant employee engagement problem at your workplace. Those efforts will pay off in spades as both your managers and their teams become increasingly engaged at work.

Lean Quote: Who You Work With Matters To Work Experience

On Fridays I will post a Lean related Quote. Throughout our lifetimes many people touch our lives and leave us with words of wisdom. These can both be a source of new learning and also a point to pause and reflect upon lessons we have learned. Within Lean active learning is an important aspect on this journey because without learning we can not improve.

"Your Job Satisfaction May Have More To Do With Who You Work With Than What You Do."   —  Alison Escalante

A business is only as good as its people. With staff retention, productivity and engagement now ranking as the most topical concerns for modern-day businesses, identifying ways to improve and build job satisfaction for employees must be on the company agenda in order to ensure continued success.

As adults, we spend the majority of our waking hours at work. That means our experience at work determines a great deal of our happiness, or not. We teach our kids that finding their passion, finding the job they will love is the path to a happy life.

A growing body of research findings that job satisfaction has a lot more to do with the people we work with than it does with the actual work we do. According to a Gallup poll, close friendships at work improve employee satisfaction by as much as 50%. Establishing and embedding a strong company culture isn’t achieved overnight; however, employers can help facilitate its development by encouraging socialization and communication. 

Consider the workplace environment and whether colleagues can talk and share ideas. Organized social activities outside of work hours are beneficial; organizations who encourage birthday celebrations or attend events together demonstrate greater engagement and contentment at work. 

Managers have the most significant impact on happiness at work and job satisfaction. Gallup has discovered that 70% of the variation between great workplace engagement and poor workplace engagement can be explained just by the quality of the manager or team leader. Managers are most effective when they make a shift from manager to coach. Engaged employees report higher levels of wellbeing and experience more happiness at work.

How does the work environment impact employee motivation?

“The only way to do great work is to love what you do” 

The above quote given by Steve Jobs highlights the importance of being motivated at work. Besides, being motivated at work comes with lots of internal and external factors and the work environment is one of them. A positive work environment can help motivate employees to work harder, stay with the company longer, and increase productivity. Conversely, a negative work environment can have the opposite effect, leading to decreased motivation and higher turnover rates.

However, a good work environment also consists of many important factors that contribute together and make a great work environment. That being the case, in this blog, we will discuss various factors of the work environment that can positively or negatively affect the motivation of employees in a workplace. 

5 work environment factors that can impact employee motivation

1. Physical environment: A physical environment in which employees stay for 8 or more 8 hours has a significant impact on the work environment of the company. Nobody majorly pays emphasis on it but even the comfort level of the seat where employees sit can also impact their motivation.

Other than that, hygiene, lighting and aura of the physical environment can also impact the workplace motivation of employees. A comfortable and well-lit workspace can help employees feel more at ease and focused on their tasks. On the other hand, a cramped, cluttered or poorly lit workspace can be distracting and cause employees to feel unmotivated.

Hence, it is very crucial for employers to create a work environment where employees feel comfortable and enjoy their work while sitting in the physical environment. Many companies are already understanding the same and 70% of the company leaders are investing in maintaining healthy physical environments in order to encourage healthy behaviors in the workplace.

2. Leadership styles: We have often heard that people don’t leave companies, they leave management. This is because the management style of leaders can significantly impact the work environment of the employees. There are various leadership theories that are opted by modern leaders to control their workforce.

Leaders who are approachable, and supportive, and provide constructive feedback can help employees feel motivated and engaged in their work. Conversely, leaders who are critical, unapproachable or micromanaging the employees can lead to decreased motivation and job dissatisfaction.

3. Recognition and rewards: Employment statistics state that in total 39% of employees feel under-recognized at the workplace. Moreover, 77% of the employees state that they would even work harder if they were more appreciated at the workplace. However,  a positive work environment is one where employees are provided with opportunities to feel recognized and rewarded for their efforts.

Recognizing employees for their hard work and providing rewards such as bonuses or promotions can help motivate employees to work harder and stay with the company longer. Moreover, when employees are rewarded, it boosts their self-esteem and turns them into more confident employees which will ultimately boost their productivity and benefit the company in terms of growth and revenue generation. 

4. Work-life balance: A positive work environment should always provide opportunities for employees to achieve a healthy work-life balance. Offering flexible work schedules, giving open communication options, and time off for personal or family trips can be a few ways to offer a healthy work-life balance to employees. This would help employees feel more motivated and engaged in their work.

Employee statistics state that 77% of employees are experiencing burnout at least once at their current jobs. When employees are negatively affected by this factor, this negatively impacts their performance as well.

5. Organizational culture: The culture of an organization can have a major significant impact on employee motivation. A culture that values collaboration, open communication, and positive feedback can help employees feel motivated and engaged in their work. Conversely, a culture that values competition over collaboration or that is highly hierarchical can lead to decreased motivation and job dissatisfaction. 

Hence, employers always need to ensure that companies should have a healthy organizational structure that would help in creating a positive environment altogether. This would help in ensuring that employees are getting healthy feedback and are successfully collaborating in the workplace. 

In conclusion, the work environment can have a significant impact on employee motivation. A positive work environment that values collaboration, and open communication, and provides opportunities for recognition and rewards can help employees feel motivated and engaged in their work. Conversely, a negative work environment that is cluttered, hierarchical, or unapproachable can lead to decreased motivation and job dissatisfaction. As an HR professional, it's important to create a positive work environment that supports employee motivation and engagement, which in turn can lead to a more productive and successful company.

About the Author: Jessica Robinson loves to write interesting and knowledgeable blogs regarding business management, education and life to satiate the curiosity of her lovely readers. Currently, she is serving as a content manager at the ‘Speaking Polymath’. Every piece of content that she writes demonstrates her immense love and passion for her profession.

Develop Employee Through Problem Solving

Problem solving is a vital skill in the workplace. The ability to think logically and creatively empowers individuals to tackle challenges and seize opportunities in all levels of business.

At its most effective, problem-solving allows employees to seamlessly engage in the psychological process of realizing, evaluating, and resolving daily challenges. At the core of business development, the ability to problem solve allows employees to learn to use accessible resources to work out issues in a productive manner that does not betray your company’s integrity.

A workforce equipped with problem solving skills will be adaptive and ready to face the challenges of the constantly evolving modern workplace. Its employees will demonstrate an ability to:

• Listen actively
• Think analytically and creatively
• Come up with innovative solutions
• Communicate effectively
• Make decisions confidently based on evidence
• Work together as a team

Additionally, employees can reach an agreeable consensus using professional perspectives afforded to them by applying problem-solving skills. In the long run, companies who utilize problem-solving training will allow their employees to efficiently and productively manage any internal or external interactions with a professionalism that will only benefit the business as a whole.

It is not the job of the leader to solve all the problems. The leader’s job is to clarify and help define the problem, find the problem owner and see that the owner takes responsibility for its solution.

Great leaders don’t subscribe to a “Do-It-For-You” methodology of talent management, rather they lead, mentor, coach and develop team members by getting them to buy-into a “Do-It-Yourself” work ethic. They view each interaction, question or even conflict as a coaching opportunity. Don’t answer questions or solve problems just because you can, rather teach your employees how to do it for themselves. If you make it a habit of solving problems for people, you simply teach them to come to you for solutions at the first sign of a challenge.

Leaders at Toyota believe that showing respect for people means you allow them to think for themselves and solve their own problem.  It is often said that the mission of Toyota is about developing exceptional people who happen to make great cars.  The point is that it is more about people and less about the problem.  The problem is another opportunity to teach them a skill for lifetime.

A team that can confidently solve problems will see problems as an opportunity to initiate change and growth, which will help to keep the business ahead of competitors.

Lean Quote: Don't Point Fingers, Focus on Problem Solving

On Fridays I will post a Lean related Quote. Throughout our lifetimes many people touch our lives and leave us with words of wisdom. These can both be a source of new learning and also a point to pause and reflect upon lessons we have learned. Within Lean active learning is an important aspect on this journey because without learning we can not improve.

"Concern yourself more with accepting responsibility than with assigning blame. Let the possibilities inspire you more than the obstacles discourage you."   —  Ralph Marston

Problems are the natural offspring of change, so you'll see plenty of them in the years to come. Build a name for yourself as a problem solver, and you'll be a valuable person to have around.

Organizations need people who can take care of problems, not merely point them out. Too many employees get this confused. They seem to think complaining is a constructive act. Their keen on identifying all of the problems - often in an accusing, blaming fashion - but contribute little towards improving things. Their attitude is "Upper Management is supposed to make it all work. We'll sit back, watch them struggle and second guess their solutions."

As employees, in fact, as an entire society, we've gotten unbelievably good at the blame game. We're experts at dodging personal responsibility and using our energy to criticize and complain instead. This carries a terrific cost. So long as we search beyond ourselves for solutions, we disempower ourselves. You might say that even as we commit the crime and blame someone else. We also become the victim.

Even when we find someone else to blame for our circumstances, we win a hollow victory. It may feel good for the moment to get ourselves off the hook, but it perpetuates the problem.

Finger-pointing does not position us to do our part - that only we can do - toward workable solutions.

We've come to expect too much from our institutions, and too |e of ourselves as individuals. In the long haul, it simply doesn't work. The organization's values grow out of individual employees values. The organization's results are merely the accumulation of singular people's results.

So instead of being a finger-pointer, and rather than trying to single out somebody to blame, assume ownership of problems. Let the solutions start with you. You'll increase your odds of career success.

Lean Roundup #166 – March, 2023

A selection of highlighted blog posts from Lean bloggers from the month of March 2023.  You can also view the previous monthly Lean Roundups here.  

Author Interview with Jim Benson - Katie Anderson talks with Jim Benson regarding his latest book, The Collaboration Equation: Strong Professionals Strong Teams Strong Delivery.

 

Too Often, Power Means the Power to Do Stupid Things - Pascal Dennis talks about different types of leaders and companies need to recruit capable servant leaders.

 

Push The Cart - Bruce Hamilton discusses the irony he feels regarding the application of robots on the shop floor.

 

TWI: Is it Time to Rethink Job Relations? - Mark Rosenthal sparks conversation about whether it is time to adjust what we teach people to say when they are teaching TWI Job Relations.

 

Most Leadership Development Training is Fluff - Bob Emiliani explains why we can do better than behaviors-based leadership development training programs.

 

Quality in a Manufacturing System - Michael Baudin shares literature on quality’s interaction with other components of a manufacturing system.

 

Deming Institute Podcast Interview with Dr. Bill Bellows - Christopher Chapman shares a recent interview between Dr. Bill Bellows and Andrew Stotz of the Deming Institute Podcast about Bill’s learning journey from the teachings of the legendary Dr. Genichi Taguchi to Dr. W.E. Deming.

 

The Six Types of Working Genius: What Makes for a Great Team & Marriage! - Ron Pereira explores each of the six types of working genius and how they relate to what we continuous improvement practitioners are trying to achieve.

 

The Pearls and Turds of Continuous Improvement - Kevin Meyer explains how successful continuous improvement-oriented organizations recognize the value of failure.

 

Finding Process Improvement Opportunities - John Knotts shares four things that help people find process improvement opportunities.

 

Are You Ready for Change? - Steve Kane shares 4 reasons why change management is essential in continuous improvement.

 

Ask Art: Why Do I Need a Kaizen Promotion Office (KPO)? - Art Bryne explains why you need a kaizen promotion office if you are serious about lean management.

 

On the Benefits of Putting Your Processes Close Together - Christoph Roser explores the many benefits of putting processes closer together.

 

Beyond Discipline: You Can’t Punish Your Way to Perfection - Mark Graban explains why punishment doesn’t work and why we need a better way.

 

Five lean mistakes to avoid - Angelica Gutierrez lists five common mistakes hindering a lean transformation from her experience.