Specialty Fabrics Review July 2019 - 59

32' Xtreme Screen

Mistakes happen, but we can do better.
First, let's think about how much each mistake
costs you, then look at some changes that can
help reduce the cost.
WHAT DO MISTAKES COST?
What does it cost when you have to remake
a product due to a mistake? Labor cost is the
big one, because you have to spend more
hours on the job. There are also materials
costs from whatever you had to discard. These
two account for a lot, but there's more to it.
Overhead cost is easy to forget, but it's
not just labor hours that you're spending to
remake a product, it's shop hours. Running
your shop costs more than what employees
are paid, even if you remembered to add in
FICA taxes, unemployment and worker's
comp. The cost of keeping your shop running
includes utilities, licenses and even the salaries
of nonproducing employees like sales reps,
managers and office staff. Your true cost of
a work hour includes a share of all these
expenses too.
Opportunity cost is invisible. It's money
you never see, which makes it difficult to
keep in mind (like the income you don't see
because of income tax withholding). When
you spend extra time remaking a product,
there's some other job that you would have
been able to do but that you now don't have
time for. So you lose the profit you would have
made on that other job too; your mistake cost
you an opportunity for future profit.
Reputation cost is easy to see, but hard
to quantify. The customer might give you
a one-star review, say bad things about you
to neighbors, and give future work to your
competitors. Your reputation is in many ways
your most valuable asset because it's the only
one that your competitors can't copy. In our
service-oriented market your reputation is
what sets you apart, for better or for worse.
Morale cost may be the most insidious of
all, because it actually increases the chance
of making more mistakes on future jobs.
Employee morale affects everything your
company does in ways that are often invisible.
Low morale could be the reason one of your
installers is always late for work, the reason
your welder didn't bother to double-check
that measurement or the reason your sales
rep didn't close that deal today.

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www.SpecialtyFabricsReview.com 59



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Specialty Fabrics Review July 2019

Table of Contents for the Digital Edition of Specialty Fabrics Review July 2019

Specialty Fabrics Review July 2019 - Cover1
Specialty Fabrics Review July 2019 - Cover2
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Specialty Fabrics Review July 2019 - Expo Brochure 1
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