Manage Workflow and the Local Optima Problem

It is a very widely held belief in business that each station in a production line should be working as hard as it can in order to maximise its efficiency. This might be a car assembly line or an accountant’s office processing tax returns using several different stages in the accounting process.  In other words, each stage is working at its Local Optimum.  Generations of Cost Accountants have encouraged this and spend endless amounts of time trying to split, for example, the cost of electricity over each work stage in the production cycle. This is probably seriously flawed thinking.  Blue Belt

 

Powerful Marketing with Google Adwords

The Google AdWords service offers you both a marketing media and a laboratory to test your marketing ideas and even the potential direction and viability of your start-up business. For a comparatively small cost, you can quickly get enormously valuable insights into your actual or potential market. Blue Belt

How to use StrategyTrees for Effective Strategic Planning

Every type of Enterprise faces the need to develop a Strategy and then implement it.  12Faces has been doing this in its own businesses for many years and we have developed a very practical approach which we share with you here. This is a blue belt article.

How to Calculate Time to Produce each Product with Takt Time

Takt is the German word for the baton that an orchestra conductor uses to regulate the tempo of the music. Takt time may be thought of as a measurable beat time, rate time or heartbeat.

Takt time is the average time between the start of production of one unit and the start of production of the next unit, when these production starts are set to match the rate of customer demand.

In Lean, Takt time is the rate at which a finished product needs to be completed in order to meet customer demand.  Blue Belt

LB1: Innovate1000: Double Growth Through Innovation

Your enterprise may be growing at present. But, you can be certain that innovation and disruption will erode what have been successful services or products. We see this at work all the time.

Years ago, videos came on a cassette tape. Then DVD’s and now streaming services. Your enterprise will decline without innovation. This innovation program will keep your enterprise thriving.

Innovation is a longer term project. Hence, Innovate1000. “Double Your Growth Through Innovation in 1000 days (3 years). Achieve this through innovative new products.

This is a blue belt topic.

SM4.4 How to Reduce Waste in Offices and Service Industries

Most improvement is an incremental process. “Kaizen” is a Japanese word for incremental improvement. Most people think of the removal of waste occurring only on the factory floor.

Waste can also occur in Office Operations; administration, human resources, sales & marketing. Experts report that Office Operations waste is at a higher level than waste on the factory floor.

The principle reason: operations on the factory floor are very visible. People optimise things on the factory floor. As previously discussed, experts have categorised waste into 8 types. Yellow &  Blue Belt

How to Benefit from Cash Conversion Cycle (CCC)

How fast can you grow your business? This depends on how well you convert your sales into cash-in-hand. Is this conversion slow? You will need cash from other sources to fund your growth in sales volume and pay expenditures. Some expenditures will be for goods and services, others for capital items. The Cash Conversion Cycle assesses how you are going. It is an important metric for fast growing businesses. Blue Belt 

C2.6 Optimise100 – Advanced Business Growth Techniques

Our Optimise100 Course is a distillation of powerful techniques for reducing costs and boosting Revenue. The outcome is a rapid boost in Profits executed over 100 days.

Other articles in this Program are pitched at our introductory Yellow Belt level.  The advanced techniques outlined in this article come from our Blue Belt (intermediate) level Knowledge Base. 

Optimise100 is designed as something you will revisit on a regular basis (perhaps annually). Then ease your way up to this Advanced Profit Growth Technique as you get more confident and experienced.

Benefit from Labour Efficiency Ratio Metric

The cost of labour is one of the largest overhead expenses in most businesses.  Any inefficiency here is an expense that must be recovered from the potential Profit of the organisation.  Labour tends to grow of its own accord and it is very difficult for the business operator to know just how labour productivity is going as costs are rising.  The Labour Efficiency Ratio discussed in this article is an early warning alert if wages are moving in the wrong direction.    Read this if: You have have sufficient staff to find yourself losing track of their costs and contribution to company productivity / profitability or if you are looking at putting on staff, like accountants, that don’t directly contribute to profit generation. Probably more likely to appeal when you have 10 staff or more.    Relies on: mentions a metric dashboard to monitor your business. Audio/visual materials: none  Degree of Difficulty: Blue Belt (intermediate)

Learn about Daily Sales Outstanding Metric

Summary

cashflow is the life blood of a business but it is a difficult thing to grasp as an abstract idea.  “Is my cashflow OK?” is difficult to answer.  Effective management of Accounts Receivables is part of the answer.  The  Accounts Receivable Daily Sales Outstanding (DSO) ratio, and its partner, the Daily Accounts Payable Outstanding (DPO) ratio respectively measure how many days it takes to collect the money owed to you and the days it takes for you to pay your suppliers.  If DPO is more than DSO, you are paying suppliers slower than you are getting money from your customers and you are in a positive position.  It also means you can fund your growth (to at least some extent) from sales.  If the DSO is larger than the DPO, you are paying suppliers before you collect from your customers so you will need an overdraft and may actually run out of cash in the foreseeable future.  Also, you will not be internally generating sufficient money to pay for your growth and will need to find other cash sources for that.

These two ratios should be key metrics on your dashboard so that you can rapidly see if cashflow is becoming unhealthy.

Read this if: you are in business!  Seriously, understanding your cashflow is a basic necessity for a business.  These two ratios help explain your current position and trends.

Relies on:  the use of ‘Dashboards’ to monitor company-critical information.

Audio/visuals: none.

Degree of Difficultly: yellow belt (entry-level).

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