After revenue growth, profit is one of the favorite toys of every entrepreneur, manager and owner. Profit is actually the essence of a whole entrepreneurial endeavor. If there is no profit then the entrepreneur cannot execute his mission, no matter if it is selfish or generous; no matter if it refers to private wealth or to the welfare of the community and society. The task of every enterprise as a profit organization is to make a profit so that it can achieve its higher goal.
How to achieve profitability? There are several ways and they depend on the type of business and industry.
Three of the resources that stand out today as crucial to increase efficiency are people, materials and capacities.
Let's see how each of them affects your business and how LOGIKO can help you master these resources:
Everybody swears that people are the most valuable resource, they call it human capital and that is what it really is. The new economy in the 21st century is really based on people or what Peter Drucker called the knowledge workers. However, there are also jobs that still have a certain manual component and these jobs need to be organized in a way that is as efficient as possible. In that sense, human work should be viewed in combination with another element – a process.
Material as a resource has always been important and now the cost of materials makes up a large part of the total cost. There are several layers through which we can observe this resource.
- On one hand we can look at the rangeof our products that is growing and expanding at an uncontrolled rate, which is not so much a problem. The problem is that the part of the assortment that looks like a blind street is not eliminated but continues to live on store shelves and warehouses, and harnesses our other resources (human work and capacities).
- The next layer are procurement costs. There is a huge impact of the procurement costs on the company's overall profits - if we reduce the procurement costs by only 10% we can increase profits by 50%.
- In the end all ends up on inventory and inventoryis made by the product of assortment, prices and quantities. Many customers hire us to reduce thestock but in the optimization phase we have to deal with other elements as well.
Capacity as a resource proved to be one of the major competitive advantages. Although the gap in business expenses between China and the Western countries is diminishing and even turning to the benefit of Western countries, it is unlikely that a major turnaround will occur in the global relocation of production destinations. One of the reasons is that there are so many capacities installed in China that after a certain point in production all above it is practically free (i.e. production costs as much as the purchase price of raw material).
Cost reduction LIM - Samobor
"We definitely have to recommend the consultants of the company LOGIKO Antonio Zrilić and Zoran Đurđević who succeeded in:
- Stabilizing the total business by optimizing individual processes
- Identifying and reducing hidden costs of production and procurement, and have been able to optimize indirect costs
- Finding and better using the hidden capacities in production and procurement...”
LIM - SAMOBOR, Managing director, Ivan Kodrić
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