“I have to lay off employees.” “My production is down and waste is up.” “My competitors are beating me but we have the exact same product.” “Why won’t these people do a better job?” Sound familiar? I have been a part of leadership in organizations, for a long time, and in several organizations. I have heard all of these expressions and more. All similar in one respect. The solution to preventing or correcting each of them can be found in the same place – Leadership. To paraphrase an old axiom I learned in the Army, “Leadership is responsible for everything that does or does not happen in their area of responsibility.” Yes, leadership is responsible.
One of the bigger issues I see Small Business Owners struggle with is how to price their product or services. They have a price, often calculated on materials and labor, but it isn’t giving them a profit. So they artificially create an “add-on” profit” charge for their product or service.
At one time or another you might have heard the word “Value Stream”. A Value Stream is every single step in the end-to-end process for creating a Product or completing a Service from the moment of Order Entry by Customer Service, to the ordering and delivery of Supplies, through the end-to-end cycle time to make or complete the product, to Packaging, Labeling, and Delivery to the hands of the Customer. There is a Value Stream for each and everything you make or sell.
A Value Stream is only concerned with cost containment; putting as much value as possible into each product or service for the same dollars. The biggest dilemma that most small businesses are challenged with is
“How Much Should My Product Or Service Cost Me, and How Much Should I Sell It For”