Are You
Getting a Good ROI on Your Daily Activities?
Return on investment (ROI) is
something that we've all heard about since our days in Economics 101.
Figuring out what we're going to get from our
investment before we make it is logical and smart business.
I doubt that there are many foundries that
don't calculate the ROI on significant modifications to their operations.
If a new core machine is going to be purchased,
its impact on the operation is sure to be calculated.
Unfortunately, I haven't noticed the same diligence on the little projects that we get involved with in the day-to-day operation. Some little thing is a minor aggravation, and hours will be spent trying to circumvent it. This isn't limited to the shop floor or always to our own decisions. Time can really be soaked up when the boss says to look at something that bugs him, but really isn't significantly impacting the bottom line. Of course, we technical people are infamous for spending five dollars to solve a five-cent problem.
I learned the lesson of paying attention to ROI on small projects early in my career. I was plant metallurgist at a pipe shop located on the southwest corner of O'Hare Airport. We were melting about 200 tons per shift in cupolas. That combined with the location made me a very popular person for anyone selling anything related to melting iron. I always had a long list of things that people wanted me to try. Somewhere along the line, I must have gained a reputation of being interested in refractories. It seemed like every other week I was running some kind of experiment to improve our refractory costs.
One day, I noticed something in our charge make up that indicated to me that we could save some money by making a change. I ran some tests, and the idea was a good one. My simple little change resulted in less than a 1 cent per pound cost-reduction, but at the time, we were in one of those crunches where all costs were being scrutinized very carefully. I told my boss of the change, and I was the hero of the week.
I liked the feeling and decided it was time to get the credit for all the money I had been saving on my refractory projects. I got out my notes and started adding things up. I came up with a pretty impressive figure. That is, it was impressive until I divided by the pounds of metal we melted. I forget how many zeros there were to the right of the decimal point, but the important point was all my changes weren't really impacting the cost of our product.
I made up my mind that before I started any other project, I would look at the effect on the bottom line before spending a lot of time on it. Actually, I developed a list of the things that people wanted me to try, estimated what the savings would be if it were successful, gave a guesstimate of the odds of success, and predicted how much of my time it would take to prove it one way or the other. That list determined what I was going to work on next.
I wish I could tell you that I continually updated that list and followed it faithfully throughout the rest of my career. There were those times that I found a problem particularly interesting and spent hours on something not all that important. Sometimes something very important did come from those "interesting problems," but most of the time it was not a very profitable result. I should have been working on things that I knew would've had a greater impact on the operation.
Of course, there's also the challenge of deciding what is important and balancing those little things that can be accomplished with little effort versus the big things that require considerable effort. That's where your job as manager comes in. You've got to weigh those things and decide what you should be working on.
At times you'll be criticized for choosing the wrong option. An employee or colleague may be irritated that you aren't addressing the problem that bugs him. Of course, unless you're extremely secure in your position, there's nothing as important as what the boss tells you to be working on.
With all that being said, I can guarantee you that you'll make better decisions by "choosing" what you’re doing rather than merely reacting to the latest thing on your desk. If you choose, you'll get a better return on investment from your time.