Have you run out of options to cut costs? Why not boost your bottom line by recovering lost fortunes caused through the value drain of your business?

This article applies to the frontline workforce, Supervisors and their Managers. When an employee completes a task incorrectly (not-complying to standards) financial loss occurs both directly and indirectly. (Please see examples below) The collective financial losses which occur over a day, week and month, accrue to become multiple millions ZAR. This loss is known as the “value drain” of the business and it is caused through people. In most instances, 80% of these losses can be recovered through 20% of the employees.

This potential pot of gold is within managements reach, not just as a once off reward, but instead a perpetual recurring cost reduction. The problem however is the many challenges in getting people to get it right consistently by working to specified standards and procedures within stipulated time frames. It also includes people making the right decisions, optimizing resources, minimizing waste, etc.

It must be tantalizingly maddening, having this dangling in front of you, but out of reach! 

The solution is in getting your employees to stop doing all of the wrong things listed above and to start doing them right.

Think about what an 80% recovery of the value drain would do for your EBITDA? Then, think what an additional 20% improvement in productivity would do to EBITDA?

Challenges

The fact is, conventional methods are too costly to achieve all of the above, and they also take too long. Your operation probably lack resources, expertise and skills.

Attitude and culture change, effective behaviour correction, pleasing unions and dealing with complex labour laws are essential ingredients for sustainability.

So is it possible? And what would it cost?

Our promise to you, is that it is and that the cost and
time Compared to conventional methods will be
significantly less, and the result will be sustained.

Please contact us for a free consultation.

 

Examples

There are direct and indirect costs that should be used to estimate actual losses.

Example 1: a bearing for a Hauler has relatively low installation and material cost. The direct loss accrues to labour and material (labour – work is repeated or the job takes too long; additional material costs when rework occurs). The indirect losses occur when the bearing fails prematurely. Early failure is caused by faulty / bad workmanship. (incorrectly installed / wrong lubricant / wrong settings etc.). The indirect cost in loss of production and possible safety issues in many cases goes unrecorded; these could be astronomical. Safety could lead to fatality, plant closure, loss of production of the hauler, and importantly, the
loss of downstream productivity. The example can be applied to most areas of the business; support services, equipment operators, uncoordinated and bad planning etc.

Example 2: Supervisors and their teams are under performing due to low efficiencies of execution; costly delays, rework, waste or other result. The supervisor could be confronted with other challenges like: he is inexperienced, he is not respected as a leader, he has difficulty correcting behaviour due to IR influences, he could be intimidated either internally or externally, bad attitude, (either by him or his team), or a myriad of other reasons. These complexities cause significant value drain to the business.

Example 3: Lack of inter-departmental coordination and support prevents operating crews / operators from achieving their production targets. The manager could be confronted with issues like; experience, lack of skills, lack of understanding on how to coordinate and plan departments etc.

Have you run out of options to cut costs? Why not boost your bottom line by recovering lost fortunes caused through the value drain of your business?

This article applies to the frontline workforce, Supervisors and their Managers. When an employee completes a task incorrectly (not-complying to standards) financial loss occurs both directly and indirectly. (Please see examples below) The collective financial losses which occur over a day, week and month, accrue to become multiple millions ZAR. This loss is known as the “value drain” of the business and it is caused through people. In most instances, 80% of these losses can be recovered through 20% of the employees.

This potential pot of gold is within managements reach, not just as a once off reward, but instead a perpetual recurring cost reduction. The problem however is the many challenges in getting people to get it right consistently by working to specified standards and procedures within stipulated time frames. It also includes people making the right decisions, optimizing resources, minimizing waste, etc.

It must be tantalizingly maddening, having this dangling in front of you, but out of reach! 

The solution is in getting your employees to stop doing all of the wrong things listed above and to start doing them right.

Think about what an 80% recovery of the value drain would do for your EBITDA? Then, think what an additional 20% improvement in productivity would do to EBITDA?

Challenges

The fact is, conventional methods are too costly to achieve all of the above, and they also take too long. Your operation probably lack resources, expertise and skills.

Attitude and culture change, effective behaviour correction, pleasing unions and dealing with complex labour laws are essential ingredients for sustainability.

So is it possible? And what would it cost?

Our promise to you, is that it is and that the cost and time Compared to conventional methods will be significantly less, and the result will be sustained.

Please contact us for a free consultation.

Examples

There are direct and indirect costs that should be used to estimate actual losses.

Example 1: a bearing for a Hauler has relatively low installation and material cost. The direct loss accrues to labour and material (labour – work is repeated or the job takes too long; additional material costs when rework occurs). The indirect losses occur when the bearing fails prematurely. Early failure is caused by faulty / bad workmanship. (incorrectly installed / wrong lubricant / wrong settings etc.). The indirect cost in loss of production and possible safety issues in many cases goes unrecorded; these could be astronomical. Safety could lead to fatality, plant closure, loss of production of the hauler, and importantly, the
loss of downstream productivity. The example can be applied to most areas of the business; support services, equipment operators, uncoordinated and bad planning etc.

Example 2: Supervisors and their teams are under performing due to low efficiencies of execution; costly delays, rework, waste or other result. The supervisor could be confronted with other challenges like: he is inexperienced, he is not respected as a leader, he has difficulty correcting behaviour due to IR influences, he could be intimidated either internally or externally, bad attitude, (either by him or his team), or a myriad of other reasons. These complexities cause significant value drain to the business.

Example 3: Lack of inter-departmental coordination and support prevents operating crews / operators from achieving their production targets. The manager could be confronted with issues like; experience, lack of skills, lack of understanding on how to coordinate and plan departments etc.

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