Now that the winter freeze has gone (at least for the northern hemisphere) and flowers are beginning to appear, bees and other insects are busy collecting food from the flowers. When the insects do their work, we know that pollen sticks to their legs and gets transported to other flowers, where it starts the reproduction process.
In at least one way, consultants are like the bees. Even though they may wish to be thought of as incredibly creative and able to develop cool, original ideas to help their clients, the fact is that consultants get some cool ideas from the companies they have contact with and transport those ideas to other companies.
While at Medtrade Spring last month, I asked providers if their net profit margin had increased in the last year. Those who declared improvement were asked if they would share what contributed to their success. Following are some of the responses I got. These five ideas can help good companies be better — and they came from other providers.
- Convert delivery trucks to run on propane
For this company, the fuel is cheaper (how could it not be?), and the gasoline engine does not require modification. Propane is alleged to burn cleaner, thus adding to engine life. The conversion is a low-cost proposition. And in the state of California, vehicles using this alternative fuel get the added benefit of using the lanes reserved for carpools and high occupancy vehicles. This, of course, reduces the travel time from one delivery to the next, and also reduces the fuel that would be wasted while drivers are sitting in a traffic jam.
- Pay attention to details
One provider improved efficiency by paying attention to the details, especially in intake and billing. Other than the obvious, like getting correct diagnosis information, it was helpful to learn the details of using the billing system. When employees learned how to get the details in and out of the system, they reduced traffic to the file room.
Efficiency is impacted by throughput and quality. Quality is about the useful output of an effort. Paying attention to the details makes more of the output useful.
- Add GPS to your delivery fleet
It is believed that this could reduce delivery costs by as much as 10 percent. The Global Positioning Satellite can report vehicle position (in latitude/longitude and on a street map), direction of travel, speed, miles driven, number of stops and time at each stop. The system can show an entire fleet at the same time to help dispatchers direct traffic. Not all GPS service packages provide all of the data mentioned, and some do not function in real time. Providers can subscribe to a portion of the service, or to all of it.
- Use larger vehicles
Reducing the number of trips to the warehouse — and the overtime associated with them — is the result one provider got when he replaced the company's vans with box trucks. Now a driver can leave with the equipment that requires delivery in the day, plus he can have spare equipment on the truck, turning it into sort of a mini-warehouse. This provider has not only reduced the number of trips and overtime associated with add-ons, but the company is providing a higher level of service to its customers.
The business also includes a mid-sized truck in its fleet rather than using only box trucks. One of the models, a “Sprinter,” is larger than a van but smaller than a box truck and is now being used by FedEx for some of its routes.
- Focus on gross margin
In a company that does a large part of its business in custom rehab, management has focused on Gross Profit Margin (Gross Profit divided by Sales). When the company gets an order and the evaluation is completed, the location manager is required to calculate the GPM. This means knowing the company's costs and knowing the reimbursement.
If the gross margin does not meet the minimum target the company has established, management can rethink the solution they offer, renegotiate with the manufacturers, renegotiate with the customer or payer, find additional funding or decline the order. This provider hasn't reduced operating costs as a percent of sales; in fact, these costs have increased. But the gross margin has increased more quickly and helped the company increase its net profit margin.
Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at wweeks@weeksgroup.com.
