CEO Tip of the Day: Waste Elimination

August 3, 2017 in General

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I have always been a huge driver of waste elimination. It continues to amaze me how much waste exists, right under our noses. For example, I had a situation this week whilst speaking with a group of highly qualified senior supply chain experts in which we spoke about the very topic of waste.

I vividly remember a great, old fashioned plant manager in automotive manufacturing crucifying me on waste, who’d these days be regarded as a T-Rex. But, in my opinion, the ‘old-school’ operations, supply chain and purchasing managers can often give you golden nuggets of knowledge.

I passed one of my old manager’s golden nuggets on this week, as a simple way of looking at the cost of waste to a business. If you look at it in terms of how much you’d need to sell to recover the cost of waste, such as a company that operates on a 10% profit margin and has wasted around £1000 on incorrect ordering. The sales team would then need to go on to sell £10,000 of product to recover that wasted money. Now, a lot of people know this but do the people at the coal face understand it?

Whatever your margin is, it’s wise to approach waste in this way. Right across my management and consultancy career, I’ve identified that by communicating this method to your organisation, measuring and reviewing it, your team will suddenly think very differently.

Words by Kevin Rumfitt, CEO of IoSCM

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