The 7 Wastes
In our series on the 7 levers, we unearth the 7 wastes, which your business probably needs to address. The seventh lever is all about your profit margin and keeping costs in check. This podcast highlights the wastes we find and how you can overcome them to drive a healthier profit.
Our inspiration for the 7 Levers comes from Pete Williams. He recently released Cadence, his very readable book about the 7 levers.
You can buy this book here: Cadence by Pete Williams
It is a story about the 7 levers. Kevin read it in about a day.
We reprise the 7 Levers
- Suspects – these people have got a feint sniff of your business.
- Prospects – opt-ins, those people who have taken a step beyond looking.
- Conversions – the % of prospects who spend money.
- Items per sale – average number of items purchased by each customer.
- Average item value – divide the total value of items sold by total number of items sold.
- Transaction per customer – repeat purchases.
- Profit margin – average profit margin, get your cost of sale down.
We interviewed Pete about the 7 levers and the Cadence book back in episode 110
Lean – The 7 Wastes
Get better deals from suppliers is one way – have a listen to our podcast with Jo Summers, an expert buyer. The other way is to look for the wastes in your business. Can you spot a 10% improvement across the whole area of costs.
Kevin teaches Lean and the 7 wastes as part of his 4 day Budgeting and Cost Control course he runs in conjunction with IASeminars.
- Overproduction – do you make or buy in more than you need. Do you get locked into minimum orders, or in advance or for a longer period? Are these examples of wastes? Do you make it yourself? Outsourcing? Are you outsourcing too much? Should you be doing more of the tasks yourself? You have to consider the value of your own time.
- Waiting Time, time in queues. Have you got bottlenecks in processes? Who is keeping you waiting? Is red-tape getting in the way?
- Transportation – moving product around. If you are moving product it represents another of the seven wastes. A services example is about spending time on the train visiting people. How much non-productive time have you had this week?
- Non value adding processes – all the things that your client appreciates and pays for is value adding. What falls outside that are non-value adding processes. Do you do everything yourself? Should you as a business owner design your own website?
- Inventory – Ties up cash and space. Do you need a warehouse full of raw materials. Just in time may be affected by Brexit.
- Motion – is everything in the most convenient place? Is your stock and materials in the right place? How long does it take you to find stuff?
- Cost of quality – the cost of scrap, re-work and poor quality. Kevin mentioned Phillip Crosby, who helped develop Total Quality Management, here he is in a video.