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Don’t Forget! You Saw it in the
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March 2021 #13260 Page #30
Find the Hidden Costs in Your Operation By Ben Hershey Solutions Provider & CEO 4Ward Solutions Group
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here are several companies both in and outside of our industry who really understand costs. It is not some academic classroom “let someone teach me from the boardroom” but hands-on experience in knowing what their costs are in their operation. In the building industry, we think we have a good handle on material costs, up until they gyrate, much like we see now. But is your management team seasoned enough to really know where the hidden costs are in their area of responsibility? In other words, how do I improve beyond my company’s current norm, but also more than the competition? To do this, you have to reduce those costs, and not just by improving the throughput rate of a given machine. You have to do some digging. Over the past several years, my articles in this column have addressed a number of topics related to this. This has included the importance of selecting what to improve; that is, identifying all the areas of potential improvement, selecting the important few, and seeing those projects through to their completion. This is critical for achieving any real gains from your improvement initiatives. The what part and the discipline to follow through without diffusing your available resources are the prime differentiating characteristics of companies that really do improve. Without these characteristics, no amount of talent or management or procedural competence can drive effective improvement. Sometimes the what part is pretty apparent; you may need to improve the capabilities of people or machines. But usually the what isn’t apparent at all, because many root causes are hidden and not terribly obvious in common business metrics. There are various hidden cost drivers. Some are inherent in almost any value-producing operation; others are most damaging in high-product-mix operations such as custom fabrication (the truss component industry). So let’s shed some light on the ones most pertinent to highproduct-mix operations.
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