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Insights and Tips for Reducing Costs and Improving Profitability

As a small business owner, you know your shop and its operations inside out. That’s the good news. The bad news is that it can be difficult to see outside your company’s walls when you need to find ways to reduce costs and improve profitability.



Here are some tips for doing just that:


Lean process optimization

Lean process optimization is the practice of improving a business process by eliminating waste and reducing cycle times. A lean process is one that has been optimized for efficiency, so it's easier for your team to execute more efficiently, faster than ever before.


Lean processes can be implemented in many different ways depending on the industry you're working in and what type of service or product you offer, but there are some basic steps that apply across industries:

  • Improve the flow of work from start to finish (or front end to back end). This may involve shifting tasks around so they're done at the right time, or breaking down tasks into smaller chunks so they don't take up as much time as they did before. You might also want to look at adding new tools or technology that will help streamline operations even further!

Waste reduction

In order to reduce costs, you need to identify areas where you can cut back. Waste reduction is one of the simplest and most effective ways to do this.

The first step in reducing waste is identifying what it is. Waste refers not only to physical items that are thrown away but also any activity or action that does not add value for your customers or organization--or does so less than it could if done differently. For example:

  • Employees who spend too much time on social media instead of working

  • A process that takes longer than necessary because someone didn't follow directions correctly (or at all)

  • Inventory items being kept around longer than they should be


Strategic sourcing

Strategic sourcing is the process of finding, negotiating and managing long-term supply relationships in order to reduce costs and improve profitability. Strategic sourcing can be used to manage any type of product or service--from auto parts to IT services or even office supplies. It's important because it helps you find suppliers who are willing to work with you in ways that other companies may not be able to do on their own. As a result, strategic sourcing can help improve your company's competitiveness while reducing costs across the board:

  • Increases buying power: By working with fewer suppliers (and having more leverage over them), strategic sourcing makes it easier for companies like yours to negotiate better prices from vendors without sacrificing quality or customer service standards

  • Enhances efficiency: When every department has its own procurement team looking for new ways

to cut costs out of their budget line items (which typically means buying more cheaply), there isn't enough time left over for anyone else at headquarters level making decisions about where those savings should go next year when budgets increase again.


Reduce costs and improve profitability

  • Focus on the right things.

  • Don't be afraid to make changes.

  • Ask for help when you need it, and don't be afraid of failure (or success).

  • Try something new!

Conclusion

The key to successful cost reduction is to find ways to reduce costs without sacrificing quality. It's important to remember that cutting costs doesn't always mean cutting corners -- it can also mean streamlining processes or finding more efficient ways of doing things.


For more information about putting this information to work at your organization contact Bryan at ( 203) 954-5121 or bryan@tangibleconsult.com.

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