Making Changes

netprofitIndustry’s averages for net-profits-to-sales ratio:

  • Below average – 0% to 9%
  • Average – 10% to 12%
  • Common to see – 13% to 19%
  • High return more common than most know– Greater than 20% (No B.S.)

Do you know how well your company did in comparison to the average? Perhaps you are not privy to such information, but maybe you know that things need further improvement. If improvement is actually your goal for this new year, maybe you should consider doing something different instead of repeating the same processes and expecting different results. Everyone should ask, “What are some of the things that prevent serious improvement from happening within my group?”

EinsteinTime and/or money are excuses many offer as the main reasons for not trying something different. Others say, “I need to find the right individual(s) to move us in the right direction.” If you feel these are your main obstacles, your company is more than likely going to continue repeating the same patterns and garner the same results it has always achieved. So what is preventing any company, department, or individual from making real, positive changes to garner better results? There are two main obstacles that must be overcome: pride and admitting you don’t have all the answers.

According to psychology studies, “Modern cognitive theory states that people tend to perceive reality in light of pre-existing expectations and will ignore large amounts of contrary data before finally changing their minds.” In other words, we perceive the world the way we want regardless of the evidence showing it differently. Why is this so often the case? The answer is simple but hard to overcome. In one word, it is pride.We cannot see that change is needed, or if we do indeed recognize the changes needed, our pride blinds us and prevents us from admitting it. We allow our pride to perceive everything as being right or wrong, as if by admitting that a change is actually wanted or needed, we are saying, “We were wrong and they were right.” This is an absurd way of viewing life in general. What worked in the past was a good thing, but evolving to meet the challenges of today does, in fact, require us to make changes and see things from a new perspective. To embrace better ideas, one needs to set aside pride and actually listen to others with a different perspective and experience. I can tell you from experience that I have seen the results, time after time, and that making positive changes garners significant net-profit gains that many are simply blind to. Had they implemented the changes without an outsider making the suggestions, they would indeed have gotten the same results, but they had roadblocks of simply not knowing and/or pride that prevented them from admitting that the changes were needed.

What are some good resources to start educating yourself and learning new ideas? Reading or listening to audio books is always a good starting point. Examples: The Goal by Goldratt covers theory of constraints, any of the Dale Carnegie publications covers better management practices, and any books covering lean manufacturing will assist process improvement. Also, seminars at your local colleges and online training on the above topics can help. In other words, start by looking outside our industry for better practices!

 

usedcarsalesmanAn all too common, repeated mistake everyone seems to make is to only listen to the equipment and plate vendors, but how effective has that been going for you? Yes, many of you feel that you have developed a close and trusting relationship with them and they have witnessed many different operations. But be honest with yourself and ask, “When the last time any of the vendors told you that you were making serious mistakes and really challenged your current practices?” The answer is never. The last thing they want to do is possibly threaten a future sale. Also, they tend to go with the latest popular practice that some of the so-called industry leaders are embracing without truly understanding the pros and cons. A disheartening example of this is witnessing clients explain how their three-man assembly team easily outpaced their very expensive, brand-new linear saw for common-run trusses. Yet the latest trend is to advise everyone to have a dedicated linear saw with a build team for all of the cutting and assembly lines. (See December’s article: Increasing Net Profit While Sacrificing Labor Efficiencies?)


todd2bThis may seem odd, but what about learning from someone who actually makes a living by giving advice and challenging your current practices: someone who’s actual, full-time occupation is to constantly read, review, and test the best practices within our industry and can teach your people better methods?
A person, who, when offering advice, must back up the advice with proven methods that follow all of the lean-manufacturing and time-study practices. That person is me. I am a paid, lean-manufacturing consultant who has spent an entire week in 85+ different companies. Just imagine the knowledge anyone could garner if they spent that kind of time in 85+ different companies, challenging their practices and offering solutions. One tends to learn from each consult and take that new information to the next. But just a warning about other services: a free consultation from some outside consultants is like a cheap public defender: not worth the time, even though they were free. The most common statement I have heard from clients is, “You sure are not the typical B.S. consultant(s) we tried before. It is obvious to everyone you are a truss guy and know what you are talking about.” Always get referrals and do your due diligence before wasting your time and money on any consultant. Like any other investment, it is all about the return you get for the time and money you spent versus what you actually gained. The good ones are worth every penny.

Long story short, pride can blind us all from seeing and learning things from a new perspective. Expecting different results from doing the same thing is foolish. Instead, we should all be smart enough to know that we do not know everything, and that we should look to others to find that missing knowledge and better ideas.

OLYMPUS DIGITAL CAMERA

Fabco Building Components
Dan and Terry Tontarski – Owners
Watertown N.Y

Since the founding of FABCO in 1978, my family and I have witnessed and been a part of the evolution of the truss industry. One tends to develop the attitude that you know what is best for your business since, after all, you built it from the ground up. The reality is that you are operating in your own busy little corner of the world.Todd brought to the table a broader perspective, inviting us to question and compare our procedures with what he has witnessed in the industry as a whole. This led us to affirm some of our practices and change many others, resulting in a significant improvement in productivity.

We are excited to move forward with the measurement and comparison of our productivity to the labor standards provided by Todd. We feel that our relationship with Todd has had a positive influence on our company. I would strongly encourage others to make what we have found to be a wise investment.

Todd Drummond Consulting LLC

Copyrights © 2002-2019  Todd-Drummond.com

Todd Drummond Consulting LLC
Copyrights © 2002 - 2019 Todd-Drummond.com

(603) 748-1051
todd@todd-drummond.com
www.linkedin.com/in/todrummond