Page 19 - MetalForming March 2013

Best Practices
customer. With some thought, managers can develop a prag- matic approach to apply these costs much more accurately without overcomplicating the process.
Once you have a good handle on your products, cus- tomers and corresponding profits, the natural question is:
Can some of those losers be turned into winners?
To turn a loser into a winner, start by getting lean, by attacking the sources of waste in your organization. This includes meeting with customers and working collaboratively to manage and eliminate significant drivers of cost, such as schedule variability.
Armed with convincing cost information, try approaching an unprofitable customer to negotiate a price increase. Or, drop the unprofitable products being manufactured for a par- ticular customer, hoping it will continue to buy the winners.
Aside from these options, consider why your company continues to manufacture products or serve customers cost- ing you money, consuming precious resources that could be better utilized by serving winners.
High-performing companies don’t spend time chasing low-margin work. MF The author thanks Ken Julien, a consulting partner with Plante Moran specializing in costing, for contributing to this
article.
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