Inflation impacts our organizations in many ways. Wage inflation makes retaining employees more difficult – and frankly more expensive. The rise of material costs impacts the ability to produce at the same rate within budget. On top of all that, the income earned is worth less than before regarding the ability to reinvest in the business.
Unless you are a central banker, it is going to be difficult for you to address widespread inflation. That does not mean, however, that you cannot fight it. Analytics are a powerful weapon to fight inflation, helping you to control costs while delivering quality products to market.
A Quick Primer on inflation
Inflation is a measure of the rate of rising prices for goods and services. Inflation creates concerns because as prices go up, the value of your currency is lower. In other words, a dollar, euro, or Yen today buys you less than it did yesterday.
Inflation happens for a number of reasons. Inflation can occur when there is a supply shortage or a surge in demand for a product. Think of simple supply-demand dynamics: if there is low supply and high demand, prices rise. Inflation can also occur when there is an increase in production costs – like raw materials (e.g., oil) – which can make manufacturing more expensive. Because the cost of making something becomes more expensive, prices increase to cover the costs. This results in inflation.
Minitab Helps You Fight Inflation with Cost Reductions
If material costs are rising, the only way to keep your products pricing stable – and maintain your margin – is to offset your costs with savings. Which of these activities is your organization doing to attack your costs and maintain (or improve!) your margin in the face of inflation?
- Map Your Process to Identify Areas of Improvement. The first step if you want to improve your process is to understand what you are doing. Once you have mapped out a process, you may find areas of waste – in terms of time or material – that you can eliminate. If not, it will provide a step-by-step map for areas to attack to look for cost reduction opportunities.
See how Minitab Workspace can provide business tools, like process maps, to help identify areas of improvement:
- Design Experiments to Develop a More Cost-Effective Product. Your product or service works well, but could it work equally well using less costly inputs? Can you even develop a better solution? Performing a structured experiment will give you the confidence to make a change that is proven with data.
Not sure how to design an experiment? We’ve got training for that:
- Utilize Statistical Process Control. Are you monitoring your processes to ensure that they are predictable and delivering your desired outcome? While traditionally used in manufacturing, SPC contains useful tools to monitor a process.
Want to learn more about SPC? Minitab offers flexible SPC solutions to meet your needs. Watch the webinar to learn more:
- Leverage Machine Learning to Better Understand Your Process. Predictive analytics is a powerful tool to help you understand the critical factors that affect your outcomes, make predictions, and help optimize processes. Looking for a practical example? Consider inventory management. In a world of rising costs, carrying extra inventory becomes painful. The key to cutting inventory costs is to optimize your inventory to avoid backorders. You can learn the basics here or dive right into a use case here.