CI 101

How do you reduce operating expenses?

There are two ways to increase profits, to increase revenue or reduce costs. Operating expense is a common headache for business owners, are you one of them?

These days consumers have more choices and more information than ever. They know that with so many competitors, they have multiple options for the needed product or service. To survive and be successful in this environment, cost reduction is critical. How do you reduce operating expenses?

Unfortunately, when it comes to cost reduction, the first thought is to reduce team members. Another common idea is to cut materials cost by buying inferior quality. You can not afford to do anything that affects the quality of the service or product. The best solution to cost expenses is to identify and reduce waste.

Waste reduction has to be an everyday activity, it is not a one-time event. With the help of your employees, you can improve your business working with continuous improvement basics. The basic activities of CI are housekeeping and organization, waste reduction, and standardization. You know already what waste is, in the next weeks I will talk about the other two.

Assessment of your business processes to identify waste reduction, standardization and organization opportunities is the best way to improve. Do not start this process as an excuse to cut manpower. Reducing team members is not, and never will be a continuous improvement goal.