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By Talmage Wagstaff
Many facilities have started to transition to full operations, although they must still adhere to OSHA guidelines regarding social distancing to minimize the exposure risk to their employees. After an 11% drop in production in the 4th quarter of 2020, US manufacturers must trudge forward, despite the increase in Covid-19 deaths in 2021.
As businesses gaze toward the “new normal” and what that will entail for their industry, many have started reevaluating their business practices, services they offer, and their product lines, to ensure that they are compliant with the CDC requirements, and they are keeping their staff and customers safe. For the foreseeable future, many companies with remote employees are choosing to keep their staff at home, and the decision is being met with overwhelming approval from most employees.
It has become more important than ever to control costs because of the economic uncertainty that most industries are facing. How can your business control operating costs and take steps toward greater sustainability in post COVID-19 times? These five recommendations can get you started in the right direction.
1. Get Everyone On The Same Page, And Stay There
Is your staff using a software package for each department? Are you operating a CRMS, accounting software, a procurement system, and a maintenance tracking program? Have you considered streamlining your systems?
Enterprise Resource Planning, or ERP, marries financial, HR, sales, and operations to get everyone functioning as a fluid unit. By merging all the separate departments into one system, it allows for a true snapshot of the state of the company at that moment. In addition, reducing the individual silos within the company and bringing all the information into a centralized location allows for departments to fully understand the big picture, and what their role lends to the success of the company.
2. Evaluate Your Contracts Annually
Which discounts are your supplier's offering? Are they being utilized fully? Is there a local supplier that could offer you the same or better pricing, without the additional freight and handling expenses? Are you taking full advantage of all warranties on parts, and training packages on your software purchases?
When discounts for bulk purchasing or cash payment aren’t taken advantage of, that’s giving money away. Every discount written into a supplier contract needs to be applied, each transaction. The procurement department should be issuing purchase orders in a manner that takes full advantage of contractual discounts, and accounts payable should follow up by adhering to the payment terms so they apply all payment discounts.
In addition, the procurement team should be actively seeking to get better pricing, and additional discounts every time the contract is up for renegotiation. In every raw material market, there is a competitor who will offer a better discount on more flexible terms, and this is an avenue that should be investigated by your procurement team annually. Many states offer tax breaks on capital purchases, depending on the type of facility your business is deemed to be on your tax certificate, usually around 2%. The procurement department should also keep your warranty information on parts and capital asset purchases, as many replacement parts and maintenance items could be covered under warranty and not require your company to pay out of pocket.
Any local supply options should be fully researched, as it will lend to your sustainability. Local supply lines reduce freight and handling charges, add cash flow to the local economy, and reduce the strain on the environment that long distance shipping causes. Always consider sourcing locally first and then explore the other avenues.
3. Evaluate Your Product And Service Line
Over time, some product lines become obsolete. It simply is no longer profitable to continue to offer the product, or the service. Your product and service line should be evaluated, at minimum, bi-annually. Are all your products still making a profit, or are specialty products for one or two customers destroying your bottom line? Is there a comparable product that costs less to manufacture that you could pitch to the customer?
If your business is building new homes, it certainly isn’t profitable to carry a line of products simply to change door knobs. Although you may have done so for a few customers in the past, it just doesn’t make good sense to send your construction supervisor to a job site to install a doorknob. These are services that you cannot afford to offer to your customers any longer.
Of course, post COVID-19, any service line that requires technicians to travel, or home installation and services should be evaluated. Consider video conferencing as a replacement for sales travel, and any troubleshooting that can take place online should replace service technician calls where feasible.
By remotely handling sales and service, transportation costs are reduced, and they reduce the impact of the transportation on the environment. In addition, the health risks that are associated with in-person visits, and corporate travel, are also greatly minimized. Any remote option for work should be fully researched. The fact is, it costs much less to work from home than to travel to an office to work, and many employees report being much happier working from home.
4. Implement A Switch Off Campaign
For those facilities that cannot operate remotely, perform an energy audit on the facility. Along with the suggestions from the energy audit, implement a switch off campaign. Encourage all staff members to turn off lights, office equipment, and machinery any time they aren’t actively being used.
Ensure that all light bulbs and equipment are energy efficient, and all machinery is on the most energy efficient setting possible. Most energy companies will provide labels and stickers to remind staff to turn off lights and equipment while not in use, and when they leave for the evening.
5. Evaluate Your Staff And Placement Annually
All your on-site staff should be in the position that best serves both the company and the staff member. Be sure that you’re playing to the strengths of your employee, and that they are in a position where they best contribute to the health of the company. Evaluate your staff annually to ensure that your employees' strengths are still being used, and that all staff members are in the roles best suited to assist the company achieve maximum efficiency.
Talmage Wagstaff is Co-Founder and CEO of REDLIST. Raised in a construction environment, Wagstaff has been involved in heavy equipment since he was a toddler. He has degrees and extensive experience in civil, mechanical and industrial engineering. Talmage worked for several years as a field engineer with ExxonMobil servicing many of the largest industrial production facilities in the Country.