Posts Tagged ‘process efficiency’

Your Business Could Be Doing Better

Thursday, November 5th, 2015

 

Lean Six Sigma - Manufacturing CPA Firm

Kyle Stemple discusses Lean with Mark Van Benschoten on Episode 8 of Unsuitable on Rea Radio. You can find all our podcasts at www.reacpa.com/podcast.

Those in the manufacturing industry are familiar with the significance of implementing tactics to increase efficiency and effectiveness throughout the organization. But did you know that these same concepts can benefit businesses outside of the manufacturing realm?

Listen to Episode 8 of Unsuitable on Rea Radio: Don’t settle for a plate of spaghetti

Consider the five key principles identified in Jim Womack’s book, The Machine that Changed the World and think about how they relate to your company.

  1. The customer defines value.
  2. The company must focus on eliminating waste. (Waste is defined as any activity that doesn’t add value to the company.)
  3. The customer establishes pull.
  4. The company must involve and empower people who add value.
  5. Total cost is the ultimate performance metric.

Now, reflecting on these principles, how can you optimize performance of your people while optimizing the customer experience?

Focus On The Big Picture

Once you've decided to embrace Lean in your business, you need to step back and map out your existing processes. If, at the end of this mapping exercise, the lines that guide you through your processes begin to look like a plate of spaghetti, you've got a problem.

Once you’ve decided to embrace Lean in your business, you need to step back and map out your existing processes. If, at the end of this mapping exercise, the lines that guide you through your processes begin to look like a plate of spaghetti, you’ve got a problem.

You want to be successful. To do that, you must have a clear understanding of what “success” looks like to you. A good way to do this is to identify challenges (present and future) that may hinder you from realizing your maximum potential. Once you know what you are looking for, you can generate proactive solutions – ultimately increasing your efficiency.

Think Lean

Everything we do, whether it's in our personal life, in our business life, nonprofit, for-profit ... everything we do - is all determined by processes.

Everything we do, whether it’s in our personal life, in our business life, nonprofit, for-profit … everything we do – is all determined by processes.

You may consider Lean Six Sigma to be a tactic solely for manufacturing companies. But Lean can actually be very valuable to all types of companies. But first, you have to understand the Lean concept.  First, Lean is not “headcount reduction” and thinking of it as such could result in greater long-term problems. When you decide to embrace a Lean approach to business, you should actually be committed to:

  1. Understanding your customers better and making sure the processes your business adopts meets (and exceeds) their expectations.
  2. Harnessing your employees’ knowledge to better serve your customers.
  3. Continuous improvement while building greater business capacity.

Things Are not Always What They Seem

When it looks like you've solved your efficiency problems, step back and reassess. Never forget, Lean is about embracing continuous improvement. If you really start digging and asking the right questions, you are going to get answers - and your businesses processes will continue to improve.

When it looks like you’ve solved your efficiency problems, step back and reassess. Never forget, Lean is about embracing continuous improvement. If you really start digging and asking the right questions, you are going to get answers – and your business’s processes will continue to improve.

When you embark on your Lean journey, financial struggles early on are normal. It can be scary at first, but if you are persistent, you will ultimately realize positive results. Think about it this way, traditional absorption accounting allocates overhead to inventory. As inventories are reduced in the interest of becoming lean, prior period costs are expensed in the current period. When your finance experts and executive leadership team aren’t aware of this transitional lag, they may mistakenly associate Lean with declining profits. Instead, keep going – pretty soon you should be able to notice improvements to your company’s cash flow.

Take The Plunge

Your Lean initiative will only be successful if management commits to its success. Therefore, they must fully commit to the concept while taking the time to become familiar with the benefits of Lean. Sure, dipping your toe in and testing the waters may seem like a safe bet, but unless you take the full plunge, you will never realize your company’s full potential and world-class results.

Lean continues to evolve from a manufacturing concept to one likened to secret weapon used to boost the effectiveness of office and administrative processes (and so much more). In this era when continued improvement is idealized, Lean has emerged as the answer. Could your company benefit by becoming Lean? Listen to this 17-minute podcast to find out.

By Kyle Stemple, CPA, CGMA, Lean Six Sigma Green Belt (New Philadelphia office)

Kyle Stemple on Rea Radio - Lean for BusinessLearn more about Lean and how it can transform your business. Listen to Don’t Settle For A Plate Of Spaghetti on Unsuitable on Rea Radio at www.rea.com/podcast or on iTunes or SoundCloud.

Share Button

Research & Development Credit Benefits Businesses Of All Sizes

Tuesday, April 14th, 2015
Plan For The Future - Rea & Associates - Ohio CPA Firm

While the 2014 tax season is now over, it’s never too early to start strategizing to secure future tax savings. For example, have you thought about improving your current processes to become more efficient? Believe it or not, taking steps to make your company “lean” may be just what you need to qualify for future tax savings.

If you own a small-to-midsize company, you probably haven’t given much thought to how the Research & Development (R&D) tax credit could help you. You might even think that the R&D credit is reserved for big businesses with tons of money to spare on technological investments. If so, then you may want to change your thought process and your business strategy.

Planning ahead is a great way to save your company’s tax dollars and there are many successful strategies from which to choose.
Click here to find out if you should be making a big purchase for your company that will help cut your tax bill.

The R&D tax credit applies to more than just businesses that have research facilities. In fact, many businesses across a range of industries may qualify for this valuable credit, but instead of asking their financial advisor for guidance, they give in to the misconception that they are not “big enough” or that they have not “big enough investments in technology.”

I recommend you avoid this mindset at all costs.

Plan For The Future

While the 2014 tax season is now over, it’s never too early to start strategizing to secure future tax savings. For example, have you thought about improving your current processes to become more efficient? Believe it or not, taking steps to make your company “lean” may be just what you need to qualify for future tax savings.

Are you familiar with Lean Six Sigma and how it can help you improve efficiency and effectiveness?
Read: Can You Explain The Concept Of Waste In Lean Six Sigma? to learn more.

According to consulting firm Smart Devine, in order to qualify for the R&D credit, your company must engage in an activity or initiative that:

  • Is technological in nature – Meaning it must rely on at least one of the following: physical sciences, biological sciences, computer science and engineering.
  • Is being conducted for a permitted purpose – Meaning that it must be intended to improve functionality, performance, reliability and quality.
  • Involves the elimination of uncertainty – Meaning the activity must be intended to identify information required to eliminate technical uncertainty.
  • Involves an experimentation process – Meaning that there must be some elements of experimentation, such as trial and error testing, prototyping, development and analysis of hypothesis.

The expenses that will be used to calculate the credit include your wages for research, supplies and contract research expenses.

Still Not Sure?

OK, so maybe you haven’t committed to an extensive lean-oriented strategy yet. That’s alright. There are many ways to qualify for this credit. Start by asking yourself the following four questions:

  1. Are you constantly developing new products or altering old products for new uses?
  2. Have you had a lean event to try and increase the productivity of a manufacturing facility, a single manufacturing line, or even a specific machine?
  3. Have you developed internal software because you couldn’t find one that met your needs on the market?
  4. Do you constantly develop prototypes to make sure your machines can produce a product that meets customer specifications?

If you answered yes to any one of these scenarios, chances are good that you will qualify for the credit.

Next Steps

If you do indeed qualify to receive the R&D credit, make an extra effort to maintain adequate records to substantiate the credit. This may seem daunting, but you are probably gathering the necessary information already. You probably just need to filter or tweak what you are already doing.

Email Rea & Associates to learn more about the Research & Development Credit and how to identify expenses that could qualify while promoting your company’s overall growth and sustainability. You may also be eligible to claim the R&D credit retroactively, contact us to learn more.

By Ben Froese, CPA (Wooster office)

 

Related Articles

How Do You Take Your Business To The Next Level?

Ohio Prepares For Year Three Of Its Workforce Training Voucher Program

Governor’s Budget Proposal Makes The Case For Tax Reform

Share Button

Did Your Company Miss Out on the Ohio Incumbent Workforce Training Voucher Program?

Tuesday, February 12th, 2013

Don’t Give Up Yet!

Applications for Ohio’s Incumbent Workforce Training Voucher Program were accepted on Monday, January 7, 2013. By the end of the day, Ohio officials said they received applications with requests exceeding the $20 million allotted for fiscal 2013. Funds were awarded on a first-come, first-served basis, so if you weren’t one of the first, you might have missed out on this opportunity for your company. But don’t give up yet…

There will be another opportunity for you to secure your piece of the pie as a second round of applications, for fiscal 2014, will be accepted after June 30 for an additional $30 million. While the exact date that applications will be accepted are not yet known, we do know what the applications will look like, how the application process will work and what information you will need to have ready to submit your application.

Why wait? Begin pulling your information together now so that you will be ready the second time around. (more…)

Share Button

Can I Get a Rebate for Training Through the Ohio Incumbent Workforce Training Voucher Program?

Thursday, January 3rd, 2013

You may have thought that you’ve opened all your gifts, but the state of Ohio has one more for you – and it’s a good one.  Launching next week, the Ohio Incumbent Workforce Training Voucher Program [http://development.ohio.gov/bs/bs_wtvp.htm] will provide $20 million in cash to businesses that provide certain training for their employees.  If your business is in one of the program’s targeted industries, you could qualify for up to $4,000 per employee.  (more…)

Share Button