Seat-of-the-Pants Management Alternative –Dickeson
happen in your shop? Then it took 1,368 hours to collect the receivable for Job C—57 days. All in all, Job C was in the plant, in one form or another, 3,398 hours—141.6 days. Sheesh! That’s a turnover of 2.6 times in a 365-day year. I’m definitely not happy with that result. Are you? Do you really care?
Are you concerned that C tied up your cash for more than a third of a year?
That’s what I mean by having some numbers to use in making decisions. Yes, by the seat of your pants you’d have a hunch that Job C was hurting you. Maybe. If you ever thought about it at all.
Look at it this way. Suppose you had a hundred thousand dollars invested in a printing plant. The plant’s making a cool 1 percent operating profit on jobs. If it’s turning your $100K four times a year, you’re getting a 4 percent operating return on that money. Right? Am I wrong? Think about it. Suppose we doubled that annual turnover rate to eight times a year. Now you’d be clearing 8 percent on your money. Which would you rather have: $4,000 or $8,000? Silly question.
Could you double that table average of 4.2 times a year to eight times? Look at the table again. What would you have to do? Could you cut the raw inventory time from an average 811 hours to 400 hours—16 days? Chop 11 days to get an invoice out in five days? Cut receivable collection to 25 days from 46? Maybe trim that processing time average by a couple of hours using XmR charting?
If only we had a table by jobs for the last quarter, the last 13 rolling weeks, we could lay out a clear, meaningful strategy, couldn’t we? If only we had that table!