David Ottenstein reminds us of what is the real bottom line for any company: it's cash flow position.
In his book, "Manufacturing for the Real Bottom Line", he describes a three phased approach to focus improvement efforts and improve the bottom line of a company, consisting of:
- Phase 1 - Make Profit Equal Profit, or measure where your company stands right now and where it should be
- Phase 2 - Make Cash Flow Equal Profit, or ensure that you improve significantly your cash flow, through operational improvements, with the objective of cash flow being equal to your net profit
- Phase 3 - Optimize Gross Margin, or look at your current cost structure to see how costs can be improved.
After all, remember that cash is king.
Santiago,
ReplyDeleteThank you for the mention, it's very much appreciated!
I hope to see the concept gain traction so that manufacturing in America can be restored, and jobs brought back home.
Many thanks, and Sincerely,
David Ottenstein
Sure David, thanks for your note.
ReplyDeleteYour approach is very simple and interesting. I look forward to reading your book!
Take care,