We once owned a manufacturing business that was growing rapidly and had reached the capacity of its production equipment. We were facing the need to buy a large and expensive piece of equipment and expand our plant, when one of our Supervisors spoke up and said, “You know, my buddy down the street has a little shop and could make a few of the simple pieces we have running on our big equipment. If we outsource those parts to him, we could use the additional capacity on our existing machines to produce the more complicated, higher tolerance parts we need. This would enable us to eliminate the need to expand the existing plant.” That guy won the best-idea-of-the-month award!
The light bulb finally went on: we had forgotten our ABC’s! What I mean is that companies may find it advantageous to make the A and B products they need – the more complex, higher tolerance pieces that require sophistication and high cost production capability – while farming out the Cs and Ds to smaller guys. Such a concept is not hard to understand, but sometimes gets lost in the inertia of doing what you always do.
Another way of looking at this is to think about all the resources at your disposal (everyone’s resources are limited to one degree or another) and decide what is “highest and best” use of those resources within your organization. Is that resource focused primarily on its highest and best use, or have your processes and procedures not stayed current with what is available? If you are a landscape company, are you using too big a machine on too small a property? Could that same machine could be used to service a much larger property, generating more revenue, while a few smaller, older pieces of equipment could handle the smaller jobs?
I was recently having a conversation with the Head of Maintenance at a large hotel complex. He was sharing how difficult it had become to find enough “techs” to handle all the needs within the hotel. One of his biggest issues has been managing the time his team needs to commit to fixing cleaning equipment used at the hotel as well as all their “regular” work. He was concerned where to find more techs to get all the work done.
I remembered my ABCs and saw this as a perfect example. The highest and best use of any resource in a hospitality/service business is customer-focused and directed. The best techs in a hotel are those that can respond quickly to a guest’s concern (i.e. clogged toilet or broken TV), fix the problem, and present a positive image to the guest. Having these special folks toiling in the basement to fix a vacuum when they could and should be improving the guest experience is a waste.
The As and Bs are customer needs. The Cs and Ds are fixing the vacuums.
In the above case, the client did not have to find, recruit, and hire any new technicians. By outsourcing the equipment repair within a comprehensive program, his equipment was operational more quickly, guest needs were addressed more quickly, techs were more content with their work, and overall costs when taking everything into account, including productivity, were lowered.
What are your ABCs? Are your resources focused on their highest and best use/contribution to your organization? How can you better handle those Cs and Ds more efficiently and less costly overall?
If those Cs and Ds involve cleaning equipment (or you just want to talk generally about your ABCs), give us a call at VSI Global.
