Increasing Profit Through Standardization

GearsIn a recent Foundation webinar, Kirk Alter of Fast Management Inc., shared thoughts on increasing profit through standardization. Standard operating procedures can be developed in a company by capturing, recording and standardizing everyday procedures to improve the efficiency of an organization. He offered tips on the best practices in companies and industries. 

PHCC Members can access this webinar on-demand here.

1. Look at each functional unit in your company:
a. Estimating
b. Accounting
c. Purchasing
d. Pre-fab
e. Construction
f. Etc.

2. Create a diagram of:
a. What gets done
b. How you do it
c. Research best practices
d. Create a written process/procedure
e. Add tools/forms, etc. as needed

3. Use team evaluation - Is this how we do it, and how we ought to do it?
a. If yes, then institute SOP and hold training sessions with everyone involved

4. Accountability – Hold EVERYONE responsible for following the procedure, including yourself, and ensure that there are consequences for failing to do so.

5.Have a process for taking feedback on a procedure & for revisiting and tweaking procedures on an annual basis
a. Once this process is fully in place you should visit a few of your SOPs each month.

6. Measure the effect of SOPs on profitability
a. Add where necessary, discard superfluous

7. Repeat

How can you help yourself?

  • Learn new habits - Join the Industrial & Technological Revolutions!
  • Put your nose to the grindstone & do the difficult work of taking the knowledge out of your head and define specifically how you are going to standardize everything in your business to maximize profitability.
  • Then recruit, hire, & train good people in those SOPs, and insist that they are always utilized.
  • Then get out of their way and let them increase your profits!


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