Precast Inc. - November/December 2008 - (Page 32) BUSINESS & MANAGEMENT Strategies that manufacturers can use to maximize profits. BY BRIDGET MCCREA H igh fuel costs, rising material prices and constant pressure to bid competitively can all take their toll on a precast manufacturer’s profits. Add in basic overhead and the cost of keeping good employees on board and productive, and it’s easy to see why manufacturers often wind up “in the red” when it comes to overall profitability. But it doesn’t have to be that way, says Tom Noon, principal at Columbus, Ohio-based Industry Insights Inc., a provider of survey research services to trade and professional associations, dealer organizations and other affiliated companies. Recently, the company completed the NPCA Benchmarking Survey to create the Precast Benchmarking Report, which precasters can use to measure their productivity, success and profitability against similar companies (see the sidebar “Precast Benchmarking Report”). “This study provides a measure against which companies in the precast industry can compare themselves to industry-wide norms,” says Noon, “and assess their own strengths and weaknesses.” That exercise dovetails into the issue of increasing profitability – something all manufacturers strive for but not all achieve, particularly when the economy is less than favorable. “Profitability is especially challenging right now in this particular economic situation,” says Noon, who advises NOVEMBER/DECEMBER 2008 | PRECAST INC. precasters to strive for profit growth in both the lean times and the boom times. “It’s something they should be doing regardless of what’s happening in the market or overall economy. In doing so, those companies will achieve maximum profitability even during the downturns.” In other words, don’t wait until profits start to slip to do something about it. Take a more proactive approach, says Noon, and use measures like the Benchmarking Report to see how well your efforts are paying off in relation to what others are doing. And while the Benchmarking Report is as detailed as it is comprehensive, Noon says simply spending 20 minutes going over it and digesting the information can pay off handsomely for the typical precaster. Internal examination To maximize profits and ensure that they’re not leaving money on the table, Noon says precasters should look closely at a few key measures, and then make the necessary changes to improve the areas that need the most attention. Some of the most important parts to observe include employee productivity, asset utilization, inventory turnover, outstanding accounts receivables and sales growth for the overall company. Expense management is also important, says Noon, as is the way in 32 Dreamstime photo Don’t Leave Profits on the Table!
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