Monthly Archives: December 2015

10 steps to a better Inventory Process

Conversations with a Consultant, Operations, Products, , , ,

To many it is a dirty word, but most businesses understand that “taking inventory” is a necessity and must be dealt with.  The frequency of it is often determined by the industry and it ranges anywhere from once a week to once a year.  But Inventory is an extremely important tool and when managed properly will not only add to a companies profit line, but contribute to keeping your cash flow lower.

Many dread the process.  It can be very lengthy and tedious.  We thought it would be helpful at year end to pass along some tips to help make this process more efficient for you.  Simply put, the more organized you are, the easier and quicker it goes and the better you do it, the more you know where your money is.  When working with clients, I often offer to do an inventory with them.  They usually jump at the offer for help, and it gives me great insight as to how they run their office and thus lets me know where to dig in deeper.  The goal is usually to do a better job with Inventory and save them time doing it.  I have listed those things I look for below.

Inventory is a process; don’t view it as a task.  So many look at it as a one time task of counting what’s on hand.  That part of the process is referred to as the Physical Inventory, but it should not be viewed as the only component.  What leads up to, and happens after the Physical Inventory is equally important in the process and each adds to the efficiency of the other.

Why is this process so important?

Inventory takes a lot of time to perform correctly.  What if you could save ½ hr or more every time you do it?  I save most people at least an hour by having them follow the steps below.  Oh, and also….this is money were talking about.  Inventory is important because the dollars it identifies are vital when figuring out your product costs, so the more detailed the collection process, the better your product costs look.

If you don’t have everything I list here in place, it may take a few months of implementing to really see the effects of how much time it will save you.

Here are what I refer to as  the 4 components of the Inventory Process;

Determining need(s)

    • Establishing what needs to be in your inventory ahead of time helps streamline the counting process.
    • Establish Product specifications and Order guides to insure consistent ordering.
    • Have Vendor agreements to insure pricing, quality and consistent supply.
    • Have Production systems in place that can establish pars on items needed to inventory.  Keeping inventory as low as possible to meet demand.

Organize

    • Organizing storeroom logically and insure items are located together.
    • Establish product pars to insure adequate space is available.
    • Create Physical count sheets to mirror storage to accelerate counting process.  (see “Shelf to Sheet” below)
    • Have someone clean and organize store room prior to counting.
    • Create different count sheets for different store rooms and consolidate like items at the end of the counting process (not during)

Daily Management

    • Label and date to help insure proper rotation (everything has a shelf life)
    • Limit access and secure storeroom when not in use. (Key control)
    • Minimize storeroom personnel to ensure consistent receiving and control
    • Limit who receives orders and handles invoices
    • Perform account receivable tasks as invoices are received

Monthly Management

Pre- Physical counting

    • Ensure the most current price is on the Inventory extension sheet (Master Spreadsheet) for each item (changes by industry) and that it is done prior to Physical counting day.  Account receivables need to be up to date at time of Inventory counts.  Doing price changes at the same time is proven to not be efficient.

Post Physical counting

    • Review and tally all Physical count sheets.  If products may be found in multiple spots, consolidate to one number to enter on the Master spreadsheet.  Doing this ahead of time will expedite the data entry AND begins the analytical process.
    • Enter counts in Master spreadsheet to allow for calculations (referred to as “Extensions”)
    • Review extensions and look for obvious errors.  – Key miss-types or entered as “each” but priced by “case” would be one of the more obvious
    • Analysis of inventory by category totals and comparison to prior inventory.  Look for any major differences, variations, or trends.

Depending on the industry, I generally advise establishing an acceptable variance by Inventory category becomes established.   If over the “acceptable” variance (5%?) then have the manager report as to why.

Other key points that will help your Inventory process
  • Make sure how it is being counted is consistent with how it is purchased, used or stored.  If it comes in a case of 100 ea., yet they are only used 1 at a time, then break the sheet down to an “each” price and inventory them by the “each”.
  • If it is purchased by the pound, then make sure there is a scale available when inventorying occurs.  Do NOT assume each one is a given weight.  There is a reason why the maker doesn’t price the product this way.
  • The Physical Count process needs to be completed at a designated time when no product will be entering or exiting the storeroom(s).  Often done after hours or before business start for the day.  If you have multiple units doing individual inventories, it is important to insure they all do it at the same time, otherwise performance comparisons are difficult.
  • Utilize  “Shelf to Sheet ” – a 2 party system during physical inventory.  Inventory is not about filling in what is on the count sheet; it is about capturing the money on the shelf.

                 Process -One person starts in the upper corner of a storeroom and calls to                                             the second person.  The person calls what item it is and how many there                                                are.  The second person finds the item on the count sheet and writes down                                             the amount.  If they don’t find the item on the sheet, they write it down                                                   separately to be added at the end of the process.  The first person then goes                                       to the item adjacent to what they just counted and calls that item off etc.                                             This is done throughout the storeroom and is a methodical way to ensure                                               everything is accounted for.

  • Make sure Physical counts are never taken while someone is sitting at their desk.  Mistakes happen and this is why they call it “Physical” inventory.
  • Lastly for proper control a non Ordering/Receiving person should be involved in performing the physical counts also.  This is a common Risk Management practice plus; people that touch these products everyday are more likely to make assumptions/mistakes during a lengthy Inventory process.

 

Carpe diem!

 

5 Keys to Increasing your Revenue in 2016

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Year end, by now most of us have been planning for next year.  Budgets, Capital expense planning, and personal goals to name a few.  The reason why most people do these exercises  are plain and simple.  Business efficiencies, Personal development, Marketing plans are ultimately for the same effect; increasing our ability to generate revenue (personal or business).  So let’s just cut to the chase, here are 5 areas’ that will help you increase your revenue.  Many have found success with these and I hope you will too.  Carpe diem!

1)         Hire your replacement – Once you have a person that can do what you do, you can focus on other important areas.  This is the best way to free your time and allow you to look more holistically at the situation.  It also gives you time to develop new revenue streams and develop those around you.  You are not really replacing yourself; you’re giving yourself a promotion!

2)         Focus on building relationships – All relationships, both inside and outside of work.  I mean everybody at work, not just direct subordinates or supervisors, build with vendors, other departments, service providers, the person who hands you your coffee, or whoever you regularly encounter. Building relationships will increase engagement and purpose which will result in improved good will, reputation and loyalty.  All of which are linked to revenue stimulation.

3)         Terminate your worst employee – Do it!  We all have a couple that we hold on to for obscure reasons.  Perhaps any one issue by this person isn’t a terminable offense, but they have several that ultimately weight down the business or effect moral.  Chronic blunders, questionable attendance, lack of focus, poor chemistry all add up and weigh on the businesses ability to generate revenue.  If you “fire” your worst employee (correctly), your staff and profits will appreciate it.  Remember Human Capital should add to the business not weigh it down.

4)         Be “Present” at everything you do – This is right out of “FISH”.  Essentially give everything you can to the activity you are performing.  Don’t “phone” it in, make it count.  Committee Meetings, Dinner with family, Chamber events are what you make of them and your actions are noticed by others attending.  Make what ever preparation is needed for the event a priority and make sure you get the most out of it, or don’t do it at all.  Just showing up and not contributing is noticed and not appreciated by those that give.  Decide what is worth doing, and if it is not worth doing, DON’T DO IT. Preparedness, ambition and contribution tend to lead to opportunity.

If you haven’t read The Fish Philosophy by Stephen Lundin, Harry Paul & John Christensen I strongly recommend it.  Short read, easy concepts, easy application.

5)         Learn to say NO – The number one attended development seminar in 2015 was Time Management according to the AMA, CCL & SBA.  Attendees are millennials and seasoned Executives, and everyone in between.  Developing and personally managing priorities often come down to one important word.  Knowing when to apply it and how to correctly apply it can be an art, but it all starts with you having clear priorities.  As Dr Covey says in “First Things First”; “The main thing, is to keep the Main Thing, the MAIN THING” Overly simplified or brilliant?  You have to say no to keep on track.  Focus and efficiency often leads to increased revenue.

6) Bonus tip!

Do more Charity work – Church, Nursing homes, Food Pantry, or ________ donate resources, funds or time when possible to events or organizations near and dear to your heart or those that align with your industry.  Others often notice (and are impressed) and you’ll get a boost emotionally.  That emotional boost alone may help your business and your revenue.  But in doing this for the right reasons and you may be surprised what opportunities come as a result.

Carpe diem!

Hello World!

Ask an Expert, Conversations with a Consultant, Marketing, Operations, People, Products, Quotes, Observations & Ironies, Uncategorized,

Today I am introducing a new blog series from C.S.Simons Consulting.  This blog will feature several different types of content on the issues that business people struggle with every day.  Advice will be given on a variety of subjects that directly effect your revenue and we are always looking for questions or topics for discussion, so please don’t be shy.

Here’s a quick overview of the categories we offer;

“Ask an Expert” Series

A collection of questions asked of me or my collaborators about many different business or management topics.  Presented simply with brief answers but we are always available to elaborate on them if you’d like.  These may be answered by someone in our firm or other experts we collaborate with.

“Conversations with a Consultant”

The format in this series is designed to be easy flowing with out too many buzz words and corporate talk.  Just simple conversations, focused on information designed to assist you with your work and help you make more money.   The majority of these topics will fall into 1 of 4 areas; People, Products, Operations, and Marketing.  These 4 key areas’ are found in every business and are the most important indicators of your businesses ability to generate revenue.  C.S.Simons Consulting exists to help others make more money, and these are the same areas focused on in our proprietary “M.O.R.E. Assessment Tool©.

“Quotes, Observations & Ironies”

Favorites and classic quotes, probably some opinions on business related current events and those that know me should expect periodic sarcasm.

 

Please let me know any questions that you have about these topics or how to implement the changes mentioned into your business.  I am here to help.

 

Carpe diem!

Ask an Expert

Ask an Expert, ,

The Question:      What are Prime Costs?

Answer: Financial speak

Prime costs = materials + labor

Prime cost is a GAAP (Generally Accepted Accounting Principles) term that refers to the costs of all materials plus the labor needed to create your product.  They are called prime because of the effect they have on profitability.  They are the “primary” contributors to your profits.

In many circles this may be referred to as “Controllable or Variable Costs”, because you have the greatest flexibility to control your profit with them.  The organization controls what you pay your labor and you can work with vendors around pricing of materials.  Most other costs in this scenario would be deemed “Non Controllable Costs”, such as rent, taxes, or utilities.  Some argue that rent is negotiable, therefore controllable, once it is agreed upon it doesn’t change unless negotiated again and therefore it is considered a non controllable.

Many industries break down the label of “materials” to other labels or set formulas specific to that industry.  But “Prime costs”  will always be cost of necessary materials(or services) and labor in the end.

For example;

Prime costs in a manufacturing business may include a distribution channel cost because of the costs associated with marketing it, the marketing is necessary to the distribution of that particular product and with out those costs the product would not get to market.  It is essential yet controllable, so it is a prime cost.

OR

Prime costs in the restaurant industry are known as the “Big 3” Food, Labor, and Liquor”, while there are other controllable costs these are the 3 that have the most effect on profits.

and so on…..

Carpe diem!

 

A Great Quote for Leadership

Quotes, Observations & Ironies, , , ,

“Begin with the end in mind” – Dr Stephen Covey

 

Known as habit #2 from 7 Habits of Highly Effective People, and one of my favorite all time quotes.  This is about vision and planning.  Vision for the workplace, for family life or for personal growth, and it is ultimately about personal leadership. You can’t manage others successfully until you can manage yourself.  You can’t lead others until you have personal leadership.  Covey speaks about the gap all humans can place between stimulus and response; and how making the right decisions’ in that gap lead to positive outcomes.  Some refer to this as the internal compass or as “True North”.  This is also the famous “personal mission statements” exercise habit.  Ever try to write your own epitaph?  Take a Covey Leadership course and you will!

While this is designed for personal management it can be easily translated into organizational mission, action plans, and methods chosen to measure success by an organization.  Understanding what is important and how you want to get there has helped change the business environment in this country.

Some confuse this to simple “Goal Setting”, as steps to completing a task but it is much more.  Goal setting helps you complete something, “Beginning with the end in mind” helps you know it was the right thing to complete!

It starts with understanding what is important to you first and foremost.  And then doing it!! …..Personal leadership

I love this stuff.

Carpe diem!

Conversations with a Consultant – Products

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This area of the blog will be dedicated to the broad category simply called “Products”.

In this category I will outline different aspects needed to design new, or strengthen existing, products with in your company.  How to look for opportunities in the market place and the science behind how to be sure the product you design will sell prior to its launch.

I will continually challenge readers to look at there business differently.  The people, the physical location, your customers, and the energy/hype these all produce are all “products” of your business that people WILL judge you by.  It all adds up and the business that creates a better EXPERIENCE with their “products” will have the ability to generate more revenue.  Which is of course what this is all about.

I will also be speaking about different strategies to use with the products you offer.  Some choose to create a bigger, better or sexier versions of an existing product line.  So what do you need to know about the competition and what you need to do to stake your percentage of the market?

Others want to be pioneers and create something new in the marketplace.  Sounds great, but what do you need to do to be both noticed and profitable.  Being a pioneer is the expensive route to go, so how much will you need for capital reserve?  How do you project that?  We’ll talk about that too.

Most companies spend time and resources in creating and maintaining a products reputation.  There are many different tactics to use depending on what type of product you present.  How do I plan and measure this? Are your people your product? do they create your brands reputation? Or do you manufacture a product reviewed by consumers?  Very different tactics and each will be explained in this category of our blog.

Experience shows that few businesses look at all the aspects needed to create a strong and lasting product in today’s market place. A chain is only as strong as its weakest link.    Marketing Consultants may touch on these aspects but seldom take this holistic of an approach, one that considers the other areas of your business needed to support your marketing tactics (People & Operations).  While these experts usually have very good advice on what Advertising mediums or campaign tactics and strategy will serve you best, there is more to generating revenue than just getting the people through the door.  It’s about execution.  The goal of these conversations are to help you create the strongest, most sustainable product possible.

 

Carpe diem!

Conversations with a Consultant – Operations

Conversations with a Consultant, Operations, ,

This area of the blog will be dedicated to the broad category simply called “Operations”.  Much of the focus will be dedicated to the common components that people skip for one reason or another.  I will show you the details to consider and tie those to the dollars and cents of your business.  Most people understand the discussion regarding “operations” in the business and how it has a direct reflection on your profit, so I don’t need to sell anyone on the importance of this category.  This is most commonly focused on in the Manufacturing or Retail sectors, can focusing on it improve the Financial or Healthcare Industry?  I will discuss these and other industries to show you what you may be missing!  I have clients from these sectors that will absolutely agree this is linked to your businesses ability to generate revenue.

The bulk of this blog will be multiple conversations over time around general management topics like Financial reporting, Auditing, Crucial Policies (every business needs), Time Management (my most popular seminar!), the many sides of Human Resources, and Labor management to name a few.  As with all of the blogs on C.S.Simons Consulting, special efforts will be made to break these down into actions that fit the scale and scope of your business.  Continued focus and discussion of these common subjects in a conversational format will make it much easier for operators to “fine tune” their own programs.  So questions are encouraged!

But I promise to still challenge you in ways that you may not have thought about!

Operations comes down to a few key area’s; Planning, Execution, Measurement, and Correction.  This blog will challenge industries that don’t think one of these pertains to them, and show them the importance.  I will also provide broader concepts to consider and different approaches to accomplish these.  Learn from my 25 years of Leadership in Operations Management, because I want to help.

This category will help keep you focused on the two things that matter most;

1) how to increase your businesses ability to generate revenue

2) how to be more profitable.

 

Carpe diem!

Conversations with a Consultant – Marketing

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This area of the blog will be dedicated to the broad category simply called “Marketing”.

In them we will continually refer to internal and external marketing tactics and discuss best practices of both.  I will be addressing how to make sure both types of marketing are part of your business.  Help you determine how much of each you may need for your situation and show you how each are directly linked to your ability to generate revenue.

Internal marketing tactics are methods you may use to get your employees to behave a certain way.  So many agree that the employee is the greatest resource to a business, and few if any show you how to market your strategies and directions to your staff.  Sometimes the best marketing takes place when you are least aware of it.  I have been recognized and rewarded throughout my career for the accomplishments of my team.  This conversation will discuss how internal marketing increased my businesses ability to generate revenue. 

There are countless resources on the internet for external marketing.  There are “How to” templates, Social media companies, Networking groups, and everybody has a better way.  Few of them will even discuss Return On Investment with you.  If it is not measurable, how can you determine success?   This blog and my business are founded on assessing ways to generate revenue, so in this blogs I will always show you how the subject affects your profitability.

We will be speaking more about basic Marketing 101 than cutesy tactics that may or may not work.  Topics like Demographics, how to assess a Marketing Campaign, Budgeting for Marketing, Public Relations, and Sales & Public Speaking 101’s, will be directed to smaller business owners.  Topics like Exploring Channels, Segregation, Big Data, and Sales Force Management will be directed towards larger business.  Each of these topics differs greatly depending on the size of your business, the industry you are in, and your personal comfort zone.  All of these topics can be applied to all sizes of business and should all be part or the Marketing conversation.

The motif of this category is on the importance of Marketing to your business.  It is a key component to generating revenue and most troubled companies I have worked with think of marketing last or as “extra money”.  If I have enough, then I will spend it.  This seldom works well and where it does work, it will only provide limited results.   These conversations will help you question your own marketing and give you multiple ways to look for improvements.

C.S.Simons Consulting is not a Marketing Consulting company.  It is a Management and Business Strategy firm, we help you get the most from your business, but I do collaborate with multiple Marketing experts that I can recommend to help design what your business may need.  My job is to discover how well your marketing is working to generate revenue for your business.

 

Carpe diem!

Conversations with a Consultant – People

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This area of the blog will be dedicated to the broad category simply called “People”.

This category will focus on a few keys aspect of People Management; Selection, Training/ Development, Evaluating, and Motivation.  This subject applies to a micro business of 1 person or company of 10,000, and we will have something for all of you!  I will give details of how to gauge this area and how each of the above is linked to your businesses ability to generate revenue.  We will show micro-businesses how to measure their own potential and larger businesses how to get more out of their labor.  We can discuss tools like Labor Optimization grids or how to plan and manage a Succession Plan for your business.  There is an endless list of topics that our clients are continually asking about.

We may present managers with challenges, that when implemented, will improve employee “ownership” and greatly reduce turnover.  We may show many managers that they are the obstacle and then present how to fix it.  It’s not that hard once you know what to look for, and C.S.Simons Consulting is here to help you.  You will also hear from certified Coaches, Corporate Trainers and other Human Resource experts on best practices in Labor Management.

Many that say “People” are the greatest asset a business can have.  They can have an exponential effect on your revenue.  There are some great companies over time that have developed effective programs and methods for developing people to a greater potential.  Our consulting firm is designed to help your business make more profit and “people” have always proven to be the single greatest catalyst for that.  Let us show you what we have learned from those companies, lets have a conversation about how to get more from the investment you make in your people.

 

Carpe diem!