Scoring

Scoring: Evaluate your existing cost reduction and profit improvement methods

Give yourself one point for each "yes."

If you score 8 points or more, your initiatives are world-class following best practices

If you score 7 points or more, you have a good Cost Reduction/Profit Improvement Process structure that should be working well for you.

If you score 6 points or fewer, your efforts are a strong candidate for review.

Here are the responses to the "no" answers (automatically provided by the interactive version)

Questions - Is your process:	No = not world-class or best practices
1. Fully supported by top management?	Research and experience show that a lack of top management support can be linked to program failure. World-class initiatives are driven from the top.
2. Formalized in writing?	A lack of documentation indicates a lack of structure, process, and commitment. World-class initiatives are fully documented.
3. Tracked & reported monthly or quarterly?	Formalized tracking at a frequency less than quarterly can lead to a loss of visibility and, thus, priority for any initiative. Tracking and scoring are a fundamental part of world-class initiatives.
4. Updated and refreshed with users regularly?	All initiatives get stale sooner or later. They tend to lose priority and focus unless a mechanism for updating, retraining and refreshing is included in the process. World-class initiatives are dynamic. They grow and that growth is passed on to the participants through regular training and other communication methods.
5. Addressing expense, loss, and revenue simultaneously?	Cost reduction processes focus on cutting, cutting, and more cutting. Sooner or later this cutting comes into collision with profitable revenue growth. World-class profit improvement initiatives look at the entire profit equation and address expense, loss and revenue simultaneously to balance growth.
6. Pervasive through the organization?	Isolated efforts can be effective for a time but they will eventually succumb to the prevailing direction of the organization. World-class initiatives are pervasive throughout the organization even if they start in one unit as a pilot and then are spread.
7. Integral to your annual operating plans & budgets?	Since profits are driven by the objectives of the operating plans and expenses are typically budgeted, any plan for change in profits must be integral to these plans and budgets. World-class initiatives include their goals as line items in plans and budgets.
8. Part of individual performance plans & reviews?	People tend to focus on those things that they are rated on (hopefully these are the right priorities). World-class initiatives include profit improvement objectives as part of individual goals and reviews.
9. Involving everyone from top to bottom?	Every person in your company has some influence on your profits. World-class initiatives include everyone as improvement is part of the culture.
10. Continuously producing needed profit improvements?	The life span of most corporate initiatives of any kind is finite. The majority of initiatives will have run their course about 3 years. The fad will have passed and management will be focusing on the next best thing. Cost reduction and profit improvement initiatives have a further life-cycle problem in that they are more difficult to perpetuate once the cream of the crop has been harvested. World-class initiatives recognize this likelihood and build revitalization methods into the system. Further, they set fresh goals no less than every year to keep the objectives fresh and the output productive.

Experience shows that the most productive and vital Profit Improvement efforts contain all of the first nine elements and continuously produce profits in excess of informal plans. The reasons that formal plans are superior to no plans or informal plans are as follows:

Formal plans keep corporate expectations in focus.
Regular reporting makes it easy to track and quickly adjust projects when needed.
Organizational and individual accountability helps people find the time, energy, and other resources to invest in creating savings.
Ongoing expectations keep the program alive. They motivate people to think "outside the box," to find new ideas when the old ones are used up. Research shows that most new ideas come from the last 10% of ideas.

Achieving World-Class Profit Improvement: See world-class profit improvement processes. A must-have resource for any cost reduction practitioners.
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You may print copies for non-commercial use within your company as long as the following copyright and contact information remain on each copy. (c) 1997 - 2006 Steven C. Martin, Business Solutions - The Positive Way www.profitpro.us e-mail smartin@0profitpro.us