VOL. 112 | NO. 112 | Monday, June 29, 1998
By STACEY PETSCHAUER
Finding the obvious
Profit Enhancement Process teaches companies
how to improve profit and overall performance
By STACEY PETSCHAUER
The Daily News
When workers for a trash hauling company go to a landfill, they drive onto the scale and landfill workers subtract the weight of the truck from the total weight of the load to determine what the hauler pays.
One hauler could have saved more than $100,000 annually if it had thought of one thing the weight of the driver.
"The business had been around for about 30 years and for 30 years, they had overlooked one detail the 150- to 200-pound driver was sitting on the truck every time it went to the scale," said Gary R. Kravitz, executive vice president of Rockville, Md.-based The Profit Advisors Inc. and one of the developers of a new profit enhancement program.
"One load was not a big deal, but when you looked at tens of thousands of loads of trash, this company was wasting well over $100,000 on an annual basis."
The company merely had to get its drivers in the habit of stepping off the truck for the 30 seconds it took to weigh the load.
"Those are the kinds of things our members are trained to find in client companies," Kravitz said. "The obvious things that theyre so busy doing with their normal work that they miss."
Finding the obvious is one of the skills promoted in The Profit Advisors Inc.s Profit Enhancement Process, which is designed to offer strategies to increase a companys profit margin and improve overall performance.
The 4-year-old program is available in the Memphis area through the certified public accounting firm of Reynolds Bone & Griesbeck P.L.C.
The process has three phases: profit opportunity assessment, profit workshops and implementation.
In the profit opportunity assessment, company officials review finances and historical data, and a group of employees is selected for interviews.
Carl J. Haag of Reynolds Bone & Griesbeck, which has offered the program since November, said his firm generally chooses leaders from each department of the company to gain input from people who directly influence the way the company operates.
The employees are asked "probing" questions about what they believe the company could do to make more money, Haag said.
"These are strictly confidential interviews so what happens when you get in to talk to these people is great. They tend to vent a little bit, as anyone would. They say, Well, if nobodys going to hear this, Ill tell you what I think, which is good," he said.
He said the first phase of the process does not provide answers. It identifies the issues, obstacles and opportunities the company needs to recognize in order to increase profits.
The results of this review are incorporated into a profit opportunity assessment report, which lists the issues the employees feel are preventing the company from making more money.
The one- to two-day workshops in the second phase of the process are designed to take feedback from this assessment and turn it into ideas that produce visible results on the companys bottom line.
Haag said the workshops usually include 10 to 15 employees, who come up with ideas on how to increase company profits.
"We try and make these employees understand that profit is not a dirty word, that if they help the company make money, they are going to be better off," he said.
He said the employees who produce ideas for projects are designated "profit champions" and given responsibility to carry out their ideas, which increases accountability.
"Its a total buy-in. When youre working for somebody, you have an idea and you think, Theyre never going to listen to me.
"When were in these profit workshops, everybody is equal. The CEO is on the same ground as everybody else, and no one can shoot down anyone elses ideas. So you get the great idea, and you actually get to generate it for the company," Haag said.
Ideas can be as simple as requiring employees to turn out lights that are routinely left on overnight, and sometimes one idea can save thousands of dollars on an annual basis, he said.
The CPA firm meets with the profit champions regularly for as long as it takes for an idea to be effectively carried out, he said.
"We measure what they are doing, make sure they can do it and see that it can actually come down on the bottom line. Then our goal is to make the companies self-sufficient," he said.
Kravitz said he finds 70 percent of all businesses are the same. They have the same basic needs good, long-term employees who are satisfied and happy and who are taking care of customers and providing quality service to ensure the customers are long-term, as well.
Helping clients fill these needs gave him and his colleagues the basis to develop the profit enhancement process, he said.
His team supplies firms with the methodology of the process and trains affiliates around the country.
The firms that carry the program are set in different geographic regions, and the company tries not to have competing firms in any area, he said.
The program is focused on helping businesses find things not readily apparent that can be improved in their companies.
"We tell them, There are lots of $20 bills, $100 bills, $1,000 bills, even $10,000 bills or more that are lying on the floors of businesses, and theyre stepping on them because they just cant stop long enough to be able to pick them up," he said.
Elite/Mastercraft Lamp Co. in Marion, Ark., is currently participating in the process.
Matthew L. Pike, president and chief executive officer of the company, said his employees have completed the first phase and already are more interested in enhancing the companys profits.
His business has been working with the program for about six months, and Pike said he already is seeing improvements in utility and phone bills and reductions in employee paper trails.
"This has caused us to track our utilities and to become more cautious about turning lights off," he said.
"It has made a large amount of difference. We were able to cut our telephone bill by 21 percent and our general utilities by 11.5 percent. Its all bottom line stuff."
His company is beginning to see differences on a larger scale as well. Some changes will be made in 30 days, and some could take eight months, but his goal is to see a significant increase in profit, he said.
"It really sparked my people to start thinking profit," he said. "Were about sales, and a lot of times we just think about getting stuff out the door.
"It kind of falls on the guy at the top to worry about profit, and now our people have really gotten involved with it. Its amazing how much of the process theyve bought into."
The Ampac Group, an Asian language translation and desktop publishing firm in Alexandria, Va., tried the process a few years ago. Walter Stewart, president of the firm, said it had immediate results.
"At the time, we were somewhat floundering, and were in need of guidance for maximizing our profits and bottom line," he said.
"We actually had some large projects on the horizon, and we needed guidance to make sure we would make the best of our initiatives in marketing and expanding our business."
He said he was impressed that the profit enhancement team did not come in with all the answers.
"He made us come up with our own answers. I was not expecting that. I thought he was going to be very didactic and tell us exactly what to do. Actually, he made us do a lot of the thinking and guided us toward the solutions we were looking for," he said.
Some program participants only wish they had found the solutions earlier.
"This is a principle that should be taught on the front end," Pike said. "Ive been in business for 35 years, and I wish I had done this 35 years ago. But, its something youre going to have to redo all the time.
"Its going to have to be a way of life, not just something that you do today and dont do tomorrow. It changes your whole way of thinking, and I think its a must," he said.