Distributors must focus on solutions that take them from their current business state to a desired future business state. As discussed in my previous article, this is done “Through Customer Driven Continuous Improvement.” (See “Independent Distributors Transforming the Playing Field,” CGI, March 2011, pp. 44–46.)
There are many elements of the Continuous Improvement (CI) planning process and in this report,I examine ways distributors can link business strategy to that process by focusing on Visual Policy Deployment (VPD), the process of establishing the visual workplace, sometimes called management by sight.
A Review of the Problem
The overwhelming majority—90 percent— of a gas and welding distributor’s activities (technology included) are non-value added, meaning the customer does not see these activities as adding value to the product or service they are paying for. Conservative estimates put these non-valued added activities at between 25–35 percent of a distributor’s operating costs. From a CI perspective, these activities are considered “waste” and are an area of concern. Using the principal of CI, the solution to the waste problem is not cost cutting, but cost management. Cost management oversees the processes of developing, producing, and selling products or services of good quality while striving to lower costs and speed delivery to the customer. For example, every dollar that Honda invests in CI, they receive eight dollars in productivity improvement, subsequently driving down costs, bringing more value to the marketplace.
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