Leave No Expense Unchecked
Jim's Formal Wear (JFW), a $25 million wholesaler and retailer of tuxedos based in Trenton, Ill., has been teaching employees how to accurately forecast their sales and expenses. Naturally, as more employees got involved in forecasting, more taken-for-granted line items could be scrutinized.
A case in point was electricity. "We had always considered our utility line as gravy," says Dale Hoffmann, vice president of operations. "We didn't imagine we could really affect it in a meaningful way."
But a little sleuthing and some well-placed phone calls proved otherwise. Employees at JFW's Ottawa (Ill.) plant, for example, learned that their electricity rate was based on how quickly the plant reaches peak capacity -- and that it reaches peak capacity pretty quickly when all the lights are turned on at the same time. "Apparently we were turning on the lights all wrong," Hoffmann says half-jokingly. "Now the plants are illuminated in waves. Managers turn on some office lights when they arrive for early meetings, and then we'll light up the rest of the plant more slowly, a few areas at a time. It's really made a difference to the utility line."
A bonus cost-saving idea: check to see how much "air" you're shipping. That's what employees at JFW's Colorado plant did when they were faced with the inflated costs of servicing dealers high up in the Rocky Mountains. They analyzed the cost of their shipping boxes and talked to a few local box suppliers. Once the employees saw how much air they were shipping, they immediately switched to a smaller box and got a major concession on the price, too.
Copyright 1998 Open-Book Management Inc.