Analyze Your Data

Ways to collect and analyze data and get employees involved in the process.


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You are surrounded by information coming to you about your business. The phone rings, the fax buzzes, the e-mails keep dinging in your inbox, your machines are logging cycles, your quality team is logging defect rates, and the financial folks are assembling profit and loss statements. You have mounds of data about your business and even though Mae West once said that “too much of a good thing can be wonderful,” she probably never owned a machine shop. There is so much data around us that it is easy to just forget that the keys to understanding and maximizing our businesses are contained in that data.

Obviously, the first step is to collect the data and build the models to correlate and analyze it. It will be a bit of work getting it set up, but once the spreadsheet model is built, maintaining it and adding new data at the end of every day, week or month is fast and easy. Shop owners need to see where their business is headed and the best way to do that is to understand past and current performance. You should measure every dimension of your business just as you would a precision part that you are making. What are the critical dimensions of your business? As a good entrepreneur you will not always listen to what the data is telling you, but it will help you make decisions.

The first area to review is your customer relationships, they are the lifeblood of your business. Determine which customers are the most valuable and profitable to you. Do you have some customers that you should fire because you are only breaking even with them or worse yet, losing money doing work for them? Is there a pattern to the type of parts you can make the most profit on? Which customers are paying you on time? Which ones have you been able to get more business from? And which ones have become a bit of a “customer service nightmare?” Build an ideal customer profile and go after them.

The next area to review is the perform-ance of your employees. Whether you have a staff of 1, 100 or 1000, it is always critical to know how productive they are and how much they are contributing to the bottom line. Oftentimes, we rely on our gut instinct to weed out the lesser performers, but if you dig down into real data, it is easier to make those determinations. You should be able to correlate an employee’s cost relative to the revenue generated from the work that employee produced. Figure out which employees are your profit producers and make sure you treat them well. Encourage your under performing employees to go to work for your competitor.

Everything that is related to production on your shop floor needs to be objectively re-viewed as well. From your CNC machines to your CAD/CAM software, your business investments will diminish in value if you don’t have a grasp on how they are perform-ing. How can you save time and resources by keeping your machines at capacity? What types of jobs are your machines most prepared to handle? All of your business tools need to be calibrated for efficiency. Determining the best strategy for utilizing machines will go a long way in predicting the long-term health of your business.

Information is a powerful tool, but left analyzed it just becomes a useless stack of numbers. Take the time to truly understand and analyze the data in and around your business. When you are able to measure your success, you have a greater chance of repeating it.