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Regain Profit Through Quality

Regain Profit Through Quality. ASQ Section 1530 Southwest Florida September 15 th , 2005 Presented by Mike Weekes Whataboutquality. Whataboutquality (716) 863 9434 info@whataboutquality.com. Why Organizations Exist Make Profit Delight the Customer Empower the Employee

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Regain Profit Through Quality

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  1. Regain Profit Through Quality ASQ Section 1530 Southwest Florida September 15th, 2005 Presented by Mike Weekes Whataboutquality Whataboutquality (716) 863 9434 info@whataboutquality.com

  2. Why Organizations Exist • Make Profit • Delight the Customer • Empower the Employee • Preserve the Environment • Meet Stakeholders Needs Whataboutquality (716) 863 9434 info@whataboutquality.com

  3. Profit The surplus of revenue generated over expenses incurred for a particular period. Whataboutquality (716) 863 9434 info@whataboutquality.com

  4. The Accounting Perspective: Sales – total money received for products & services. Variable Costs – raw material, energy, direct labor to provide the products and services. Contribution Margin – sales income minus variable costs. Fixed Costs – pay, costs to keep operation running, regardless of products and services produced. Profit – Contribution margin minus fixed costs. Whataboutquality (716) 863 9434 info@whataboutquality.com

  5. The Accounting Perspective: Break Even Point – where Sales equals Fixed Costs and profit = Zero NOTE: If Sales Grow and/or Variable Costs decrease, Contribution Margin Grows! WHEN COSTS/UNIT DECREASES, PROFITS GROW! Whataboutquality (716) 863 9434 info@whataboutquality.com

  6. Ways to Improve Profit • Increase Revenue • Decrease Costs NOTE: Increasing revenue doesn’t always lead to profit & income growth! Whataboutquality (716) 863 9434 info@whataboutquality.com

  7. Ways to Decrease Costs • Layoffs • Plant Closures • Improve Your Underlying Behavior Whataboutquality (716) 863 9434 info@whataboutquality.com

  8. Changing Your Underlying Behavior • Improve Effectiveness • How well you meet or exceed the customer’s requirements. • Improve Efficiency • How much it costs you to deliver the product or service. Whataboutquality (716) 863 9434 info@whataboutquality.com

  9. Changing Your Underlying Behavior • Specify VALUE in the eyes of the customer • Map your PROCESSES • Eliminate WASTE / non-value-added work • Improve FLOW – remove bottlenecks • Involve and empower EMPLOYEES • Continually improve the process Whataboutquality (716) 863 9434 info@whataboutquality.com

  10. Competitive Tools & Concepts • Lean • Six Sigma • Theory of Constraints Whataboutquality (716) 863 9434 info@whataboutquality.com

  11. Competitive Lean Tools • Process Mapping • Waste Elimination • Flow Improvement • Customer Focus • Capital Reduction Whataboutquality (716) 863 9434 info@whataboutquality.com

  12. Six Sigma Tools & Concepts • Variation Reduction • Scrap and Rework Elimination • Process Control & Capability Whataboutquality (716) 863 9434 info@whataboutquality.com

  13. Real Process Costs ….That Steal Profit: • Lead times in excess of customer requirements • Excessive work-in-process (WIP) inventory • Bottlenecks and shortages in production • Over-production • Variation in the process Whataboutquality (716) 863 9434 info@whataboutquality.com

  14. How Competitive Is Your Organization? • Deliveries • Inventory Turns • Quality • Supply Chain • Value Added (per employee) Whataboutquality (716) 863 9434 info@whataboutquality.com

  15. How Competitive Is Your Organization? Struggling Progressive Advanced Deliveries <70% O.T. 70 to 90% > 90% Quality not sure 3 to 4 sigma >5 sigma Inv. Turns < 5 10 to 20 > 24 Supply Chain* lowest price qualified total value Value Add / Emp. < $70k $70k - 110k >$110k *relationship with suppliers Whataboutquality (716) 863 9434 info@whataboutquality.com

  16. The Cost of Poor Performance Profit Loss 40% 25% 15% 5% Struggling Progressive Advanced Whataboutquality (716) 863 9434 info@whataboutquality.com

  17. The Snowball EffectLong Term Continuous Improvement $ $ $ $ Revenue Profit Costs YEAR 1 YEAR 2 YEAR 3 YEAR n Whataboutquality (716) 863 9434 info@whataboutquality.com

  18. Conclusions Quality is an investment, not a cost. Quality reduces product costs and regains profit. Continuous improvement yields growing Revenues, Income, Growth, Market Share and Profit. Investing in Quality leads to improved, more competitive performance, higher margins, improved reputation with Customers, lower costs, happier Employees and satisfied stakeholders. Whataboutquality (716) 863 9434 info@whataboutquality.com

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