Precast Inc. - November/December 2008 - (Page 33) which the company’s operating expenses and sales volume become more and more difficult for manufacturers to achieve. But that doesn’t mean it’s impossible. Here are 10 ways that compare to that of its industry peers. you can start boosting profitability at your firm right now: During the examination process, watch for any discrepancies between the firm’s historical data and with that of the industry as a whole. “If you zero in on something that seems out of line, 1. Understand that more sales don’t necessarily translate into understand that there could be a good reason for it, such as that higher profits. While you boost sales, be sure to also your firm operates differently than another company,” says control costs, prices, employment and your product/service Noon. “It’s important to understand why it operates differently mix. For example, you might try increasing sales by adding and whether that’s affecting profitability.” a new sales rep or expanding your geographic area in a way that covers (and hopefully exceeds) the extra cost incurred If the internal exam is done thoroughly and comprehensively, by the new employee and the expansion. it should reveal one or more areas that need improvement. Once those areas are identified, Noon says the next step is to look even closer at those activities or operations and make the 2. Realize that increasing small-volume orders can hurt necessary changes. Take employee productivity, for example. If profitability rather than boosting it because of the added the introspective look turns up a few problem areas with administrative costs associated with tasks like invoicing and personnel productivity, Noon says a quick look at the dispatching. Benchmarking Report can help solidify that assertion and solve the problem. “You might look at your payroll costs overall as a percentage of sales versus the The Precast Benchmarking Report rest of the industry, or you might look is the precast concrete industry’s more closely at your fringe benefits or what you’re paying for each position,” most important comprehensive study says Noon. “By comparing those benefits of financial data, sales mix, salaries and payments to the rest of the industry, and employee benefits. The you’ll be able to pick up on anything that’s information for the Report is out of line and give it some attention.” compiled and presented by Industry Overcoming falling profits isn’t always Insights Inc., Columbus, Ohio, from easy for manufacturers, particularly when the annually conducted NPCA “industry norms” don’t apply to a Benchmarking Survey. The precast particular company. Take the precaster that manufacturers who participate in uses a low-margin, high-turnover strategy, the Survey and the information and who looks at its gross margins and they provide are known only to determines that they are on the “low Industry Insights and kept strictly side” compared with other precast firms. “In this particular case, the precaster confidential. doesn’t necessarily have a problem, In an industry where company because it operates differently and makes owners have access to very little up the profits with high inventory data, the Report stands out as a turnover,” says Noon. key source of benchmarking The precaster who uses a high-margin, information that can help you do a serious analysis of your company, low-turnover business approach would run identify key trends in the industry and help you plan strategically into similar challenges when attempting to for the future. measure itself against industry norms. The Precast Benchmarking Report reveals product sales summaries, position“Every company is different, and each has by-position salary averages, typical employee benefits and thorough financial different strategies and competitive summaries, segmented by company size, profitability and geographic region. climates to deal with,” says Noon. “The The Report allows companies to measure their performance against the key is to realize that industry norms are not set in stone in terms of how they entire industry and against other companies in their region. It is also the only relate to your company.” industry report that measures sales mix, providing companies with a valuable tool to evaluate the industry and plan for the future. Tips for success The 2008 Precast Benchmarking Report sells for $250 to NPCA members and Staying in the black isn’t easy for any $500 to nonmembers. For more information, contact NPCA at (317) 582-2324 or company, and with today’s competitive toll-free at (800) 366-7731. climate and economic woes, the goal has Precast Benchmarking Report NOVEMBER/DECEMBER 2008 | WWW.PRECAST.ORG 33 http://www.precast.org
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