Operations / R&D (Research & Development) represent the production, creation and innovation of value for the customer.
What does the customer value?
This is the question that should drive how the business creates value and provides a solution to a real problem in the world.
The cost of manufacturing each unit (and the price you charge) can play a significant role how quickly your business generates profit each month:
There are a variety of ways we can improve profitability and cash position:
- Reduce cost of goods
- Identify a cheaper supplier
- Apply value engineering to the development process (see resource at end of article)
- Buy inventory in bulk or when on sale (but don't over-purchase) to get a discount
- Produce your product or service more efficiently
- Introduce higher margin products
- Identify offerings that maximize perceived value to the customer and minimize the cost of production
- Liquidate surplus inventory
- Run a sale to turn overstocked inventory back into cash
- Optimize inventory purchasing
- Delay unnecessary ordering that could lead to overstock (Inventory Planner is a great tool that can help plan out replenishment)
- Postpone capital expenditures or improvements
By identifying the symptoms of bottlenecks in the areas of your business, we can identify potential solutions to alleviate constraints.
- Inventory is running out, despite available cash to purchase
- Fulfillment time is too long
- Products/services are not innovating enough to keep up with competition
- Customers have purchased everything you offer and have nothing else to buy
Apply it to your business (fill in the blank with one of the tactics above):
- If I were going to _________ right now, where would I start?
- How have I found ways to _________ in the past?
- Who in a business/industry similar to mine would I be able to ask about _________?
- How could I inexpensively and quickly test _________?
- When can I commit to testing _________, and how will I know if it’s working?
R&D (Research & Development)
When considering your next product or service that you'd like to introduce to the market, consider how you can intentionally develop the offering in a way that maximizes profitability.
Beginning at the 35:00 mark, Sharon Price John gives us a great example of how value engineering can help improve the profitability of your business: