Developing a zero-based organization

Zero-based productivity:

DIRECT LABOR-- Waste evaluation:

• Identify activities that don't generate value

• Compare labor practices to existing benchmarks)

• Equipment scheduling and maintenance standards-productivity loss.

• Limit to those required for maintenance productivity-quality standards.

INDIRECT LABOR--Activities done by line operators vs support staff. Activities performed internally vs outsourced. Regulatory requirements,customer specs and general practices: what is really needed to address market needs. Product sales price-cost of fulfilling customer requirements. Management structure-remove unnecessary layers.

WAREHOUSE AND LOGISTICS--Inbound logistics versus warehouse versus outbound logistics

MATERIALS--Vendors and commercial terms. Maximizing total cost of ownership. Process waste & product giveaways

The survival minimum--Customer value: satisfying but not exceeding customer requirements for service, features, and specifications. Regulatory requirements-hygiene standards. Non-negotiable customer requirements-quality

zero-based productivity combines greater visibility on spending and investment decisions, creates intelligent targets for spending and performance, and promotes a philosophy that empowers leaders and encourages them to allocate the company's resources in the best possible way.

Zero-based budgeting process reallocates funds to higher-value priorities that focus the organization—from top to bottom.

Zero-based productivity can not only create a fit-for-purpose cost structure, but it also frees up funds to invest in strategic growth initiatives.

Zero-based hiring:

Hire the best employees, not the best candidates--How you source, assess and hire the best employees is fundamentally different than how you source, assess and hire the best candidates. It seems that most companies have designed their hiring processes around the needs of best candidates. This is one reason they’re not seeing enough top employees.

Make the job description equal the real job--Define the deliverables and some of the key sub-steps required for on-the-job success.This is a far better way to understand the real job than the typical job description listing skills and experiences.First, tell your candidate what’s expected on the job. Then ask them what they’ve accomplished that’s most comparable. Dig deep (10-15 minutes on three or four accomplishments is about right), and you’ll quickly know which group you’re dealing with.

Measure first impressions at the end of the interview--First impressions don’t predict job success, even for sales positions. Great comparable past performance does predict job success, even for sales positions. There are many people who make good first impressions who aren’t very good. And there are some very good people who don’t make a good first impression.

Increase your market share of top employees, not top candidates--First fire your recruitment advertising agency if your ads aren’t pulling in enough top employees. Don’t listen to their excuses.To increase your market share of the best employees, you need hard-hitting themes which capture their attention and which cater to their dominant needs.

You don’t need to hire passive candidates--Instead of waiting for employees to make recommendations, encourage them. Ask them who the best people are they know from prior companies. Only do this with your best employees, because they are much better at identifying talent. Then have your best recruiters call and network with these pre-qualified top people.

If you’re using traditional behavioral interviewing, stop--The key is to develop comprehensive details about a candidate’s most significant accomplishments in comparison to the deliverables described in the job profile. The interviewer then needs to look at the trend of these accomplishments over time to determine competency, motivation and potential.

Undersell and overbuy--Describe the challenges in the job, and make the candidate prove to you that he or she can achieve them by giving detailed examples of what they’ve done similarly. You can’t tell the person the job is great: they’ve got to figure that out for themselves. All you can do is guide them along. This is what great recruiting and interviewing is really all about.

Zero inventory:

Zero inventory--Zero inventory is a business strategy where companies aspire to hold little or no on-hand inventory stock. The aim of zero inventory is to order the exact quantity that will be sold, and receive goods into stock when they are needed. The zero-inventory approach is not feasible for all enterprises but is perfectly suited to many businesses in today’s technological environment. Most internet-based retailers operate using the zero-inventory model, particularly for high variety, perishable and fashion-based consumer lines. This allows companies to maximize cash-flow by raising the speed and rate of inventory turns.

Zero inventory and the supply chain--Suppliers need to perfect their operations and work with flawless efficiency to generate smaller, more frequent production runs. They will need to fulfill orders individually and ship these straight to the customer, which will require some negotiation to agree on minimum quantities.

Zero inventory and stock control--For the zero inventory model to work effectively, goods must be produced and moved based on actual demand or consumption. To ensure all inventory processes are optimized, companies need an inventory management system that provides a holistic view of all the suppliers throughout their supply chain.

Zero reality--It is unlikely that most businesses will truly achieve zero inventory because many will continue to hold some buffer stock for emergencies, late delivery, natural disasters or any risk that threatens customer service.

Financial benefits--The closer a business can get to achieving zero inventory, the greater the cost and benefits. Benefits include improved cash flow, reduced carrying costs and inventory waste from maintaining large, unnecessary levels of inventory stock.

Cost reduction strategies:

Reduce labor cost--Hire skilled labor

Indirect cost reductions--Travel Contractors Company vehicles. Business events. Legal services. Financial services. Administration salaries. Office supplies. Reduce staff turnover

Direct cost reduction--Wages Insurance Payroll taxes-(use fewer workers-slow period). Substitute less expensive materials (without compromising quality & sales)

Lease expensive equipment or buy refurbished

Buy material at a lower price. Use fewer materials-without compromising the product. Reduce waste. Use lean manufacturing. Reduce overheads. Reduce salaries. Negotiate with suppliers. Barter finished products for raw materials. Quick payment for lower price-this will help with cash-flow.