Jul
20
10 Tips To Get Managers Accountable For Cost
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Getting anyone to be accountable for profit or loss (P&L) can be troublesome – all too often meeting the requirements of the customer at all costs can cause significant problems. All companies need to make money and as a result all employers, managers included, should be cost aware.
1. Create a culture where costs are seen as important. This may sound obvious, but you do need to ensure that costs are seen as being the responsibility of everyone, that everyone needs to pull together to try and keep costs down. So get everyone aware of costs.
2. It is also important to make managers aware of what the implications are if they do not become accountable for costs. If there are negative possible implications then tell managers. Paint the whole picture so that they can be fully aware of what will happen if they don’t become accountable.
3. Set out clear results that you want to see achieved. There is no point in telling managers afterwards what you wanted them to achieve. Tell them upfront and set goals that you want to be met. If you want to see costs reduced by 10% over a year, then this is the goal that should be set.
4. However, it is also very important to ensure that you set clear goals that can be achieved. If the goals that you set are unachievable, then you are asking managers to become accountable for the impossible and this is not a good way of treating any employees. So set clear and achievable goals.
5. Now you need to establish a culture that is based on ‘joint accountability’ this means that the manager or any team member cannot be seen to have performed adequately if the team does not achieve its results. Ensure staff are equipped with how to generate teamwork and ensure that departments rather than individuals are working towards budgets and financial targets. So if the 10% reduction is not achieved then the management and all the employees have failed and they need to be aware that this is the culture in which they operate.
6. One way of reinforcing the culture of accountability is to keep reminding managers that they are accountable and check how progress is going with regard to ensuring that costs are being kept manageable and that managers are ‘on track’ with regard to being accountable for costs.
7. Do not indulge in playing the ‘blame game’ because this will simply ensure that you create a culture of fear and this will not be conducive to a positive working environment. Managers who operate within a culture of fear will simply pass this on to their staff and the workplace becomes a difficult place for everyone!
8. Try to provide positive incentives and use the carrot and not a stick to get results. These incentives could take the form of bonuses, an extra day off work and so on. They do not have to be massive, but they can act as an incentive, so that accountability becomes more appealing. However, it is important to bear in mind that you are dealing with managers, so they should have some degree of accountability anyway!
9. Remember that you have to take managers with you. This is different from them just going through the motions. They have to be fully committed to the process of being accountable for costs, so if necessary invest in training for them.
10. Finally keep reviewing progress and identify any areas that are ‘weak’ before they present a significant problem. This will give managers the opportunity to address problems on a regular basis and eventually they will be able to ensure that these problems are eliminated and that costs will be kept down and kept manageable.
Jul
19
10 Ways To Improve Supply Chain Inventory Management
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Inventory management is something that is often overlooked in the ‘grand scheme’ of things, but in reality, if you improve your supply chain inventory management systems, then you can eliminate waste, reduce your inventory storage costs and effectively save a significant amount of money, so it is certainly worth looking at ways in which you can improve your inventory management.
1. The most important thing that you can do when it comes to improving your supply chain inventory management systems is to continuously look at how you are doing, what you can do to improve and any ways in which you can make the ways in which you manage your inventory or stock more effective. This is really important because it will ensure that you are always striving to make the systems that you use better, rather than looking at specific areas of inventory management, bringing in ‘improvements’ and then assuming everything is fine. You cannot assume this; you should continuously check to see what is working well and where any areas of weakness are. Remember data analysis is key – tools like ABC analysis can really help you in understanding your inventory.
2. Reduce the storage costs for inventory: By holding only the stock you need, either for Just in Time manufacturing or with regard to optimum stock levels you will reduce the overall storage costs for stock. They will need far less storage space and you may be able to reduce the amount of warehouses that you need. In addition you will not have to secure as much stock, which has a knock on cost benefit.
3. If JIT manufacturing is not an option, then make sure that you can base the amount of ‘safety stock’ that you hold by using demand forecasting. If you use forecasting models to help you analyse and then predict likely demand, you will be able to avoid overstocking or the dreaded ‘stock outs’. The software that you use to forecast demand will also help you to balance the risks associated with either too much or too little stock at any given time.
4. Automate wherever possible. The more a system can be automated the less it generally costs to run in the longer term, so wherever you can make sure that you can automate the facilities that you have.
5. Use technology to help your improve inventory management, whether that is through tracking items or by making sure that technology is responsible for replenishing stocks, you really need technology to help you take the staff time out of inventory management.
6. Ensure that there is joined up thinking in your organisation with the procurement team working closely with the inventory management section so that each know what the other needs. If these two teams work in isolation, then there will be little in the way of improvements over the longer term.
7. Consider implementing joint procurement systems with common suppliers, so that you can ensure that your costs per item are reduced.
8. Extend the time that is required before you have to pay. This will ensure that the stock that you are holding is not paid for until the last minute, which will save money over a long period.
9. Consider using vendor managed inventory systems, where the vendor actually manages your stock for you. This will save you all the paperwork associated with having to place orders, ensure that they are delivered and so on.
10. Never assume that you have made all the improvements that you possibly can. There are always new automated systems or new technological aids coming on the market all the time that will help bring about improvements to your inventory management; so strive for continuous improvements!