Part 3 - More of ‘What’s in it for you?’…

As you know, I have been talking about efficiency for quite a while. Of the many definitions, I see efficiency as the ability to accomplish a job with a minimum expenditure of time and effort. I have to believe that a company’s main objective is to reduce costs, increase quality, increase revenues and, finally, increase profits.

The last couple of ‘ideas’ covered reducing costs and increasing quality, this one covers Increasing Revenues.

On the Topic of Increased Revenues

For the sake of argument, let’s assume that your efforts to be more efficient are successful. This means you have reduced the cycle times of your processes and it could produce several advantages that would result in increased revenues.

If I can produce more goods in the same amount of time and there is a market for them, it would increase revenues. Ford planned to manufacture a specific amount of new Mustangs. The demand has been much greater than that amount. They were able to increase output some, but not enough to maximize the revenue potential of the Mustang.

Time to Market is not a new concept, but what does it mean? If you can get to market early with a high demand product, you can capture a larger revenue stream than the competition. Let’s look at the Apple iPod. They were there first to market. They created the demand. They had the inventory to meet the demand. Early to market enabled them to build a successful music distribution service. By the time Microsoft responded, the Apple customer base was set. The Zune is playing catch up and is not likely to ever make up the lost ground.

If you are late getting your product to market, you may lose market share that you can never get back. Amazon.com was the first company to sell books online. They put in place inventory, infrastructure, logistics and big advertising. They had been up and running [gaining market share] for at least a year before stores like Barnes & Noble realized that they needed to get into that market to compete. Barnes & Noble will never be able to make up that gap.

Our customers have discovered an additional advantage to efficiency. They are using it as a selling tool to get new business. They bring in their prospects and show them how efficiently they manage their design and manufacturing processes. They are landing new business – new business yields new revenues.

You may have not have given it much thought, but Efficiency can increase your revenues.

Next topic – increase Profits

Your Thoughts…