Thursday, October 13, 2011

How to Turnaround a MSI Or SSI Manufacturing Unit to Profit?



This article is written for decision makers and chief executive who wants to face the financial reality, take the challenge for management decisions, using the latest technology to improve our products and ultimately implement a restructuring plan to medium-scale or small scale production unit profit.

article help capsule only, will only stop the bleeding. Complete healing and strengthening of the Unit for the future is the responsibility of top management.

must know that SMEs are responsible for nearly 65% of global GDP - representing more than 90% of all enterprises, employing more than 90% of the global workforce. So, we have a social responsibility to see that this unit earnings in order to survive.

does not take an MBA to shift production units at a profit. You should have a lot of courage, strength analysis, a perfect plan of action and the team to implement the plan. This is the only requirement. We will go systematically and step by step to build a master plan.

We have made a simple formula borrowed from my grandfather, who was a successful businessman. It has been proven Step Eight cyclic formula as below :-

(1) Calculate the gross profit ratio (2) Analyze (3) Build a Plan of Action (4) Implementation (5) get feedback (6) Build a corrective action (7) The implementation of (8) Calculate the gross profit ratio of Go to (2) again.

(1) Calculate the gross profit ratio (2) Analyze (3) Build a Plan of Action (4) Implementation (5) get feedback (6) Build a corrective action (7) The implementation of (8) Calculate the gross profit ratio of Go to (2) again.

...

Step-1. Calculate the gross profit ratio - the ratio of gross profit net sales expressed as a percentage. Gross profit is the difference between net sales and cost of goods sold. For production units, the cost of goods sold will be equal to the sum of the costs of raw materials, salaries, direct costs and all production costs of the formula is:

= ratio of gross profit (gross profit / net sales) x 100

The gross profit ratio is an indicator of the extent to which the selling price of goods per unit can be reduced without incurring losses in business. Gross profit should be sufficient to recover all operating costs and build reserves, after payment of fixed interest, fees and dividends. Higher gross profit is better. If you find your gross profit ratio is low and decreases each month, and then analyze the business as below.

2 Analyze: - collect responses in a statistical form for the following questions. (a) the profit picture temporarily low or very sick? (b) the core business and remain financially viable? (c) Replacement of non-productive members of top management and to reduce management layers. (d) Identify the most profitable customers. (e) reduce the investment in less profitable products and to increase to more profitable products. (f) close some facilities to reduce overhead, selling all objects are rarely used, remove any objects that have the right to trade (g) reduce the administrative functions. Outsource all together services and lay off staff duplicate. (h) to explore advanced technologies in order to rationalize the production process and product. (i) Accelerate the development of highly profitable products by shifting resources from less profitable products. (j) Establish an automated phone system and re-design the company website.

3 Build a Plan of Action: - tabulate all the data from the above analysis. Build a Plan of Action and include time allocation to implement it.

4 Implement: Implementation of the Action Plan, you will need a core team. Select a team consists of an existing person with you. Consider hiring a turnaround specialist or a manager or professional or trade konzultant.Tima is important to implement the plan successfully. Invest time to learn the most. They pay the best wages and benefits. Interact with this team and give them a logical enough time to implement. Having formed a team, never try to move them or change them. It is important that all team members need to feel safe and invest energy and time for re-structuring of the unit. Have full faith in their performance. Never discourage a team and treat members of their families. Remember, this is just the first step towards success. Future steps will be automatically discovered by the core team.

5 Get your feedback: - Devices regular feedback system. Feedback is the result of the implementation plan. View the feedback is accurate, unbiased and truth alone.

6 Build a Corrective Action: - If the feedback is satisfactory, no corrective action is required. If the feedback is not satisfactory, to build a corrective action plan. This plan is only a supplement to the plan.

7 Implement:. Now the core plan and implement corrective action plan, together with

Repeat the cycle until you are comfortable with the gross profit ratio. In fact, you can never stop. It's like riding a bike one wheel of the cycle, when to stop, you will fall. Business is like that only.

Remember, this is a proven method, but success will depend on your and the team's hard work, honesty and patience. It is not possible to obtain direct result of the restructuring of the productive activity of any unit.

You are welcome to contact the author for any clarification or assistance.

This article was written by Subodh Sarkar Dated: 8 October 2010

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