Thinking Thursday – How Does Adding Value Increase The Bottom Line?
Many times I run into a situation where the business think they understand what it means to add value and remove waste but don’t see how it will help their bottom line quickly. In larger companies it’s an easy argument to make that you will reduce costs, lower turnover, have a happier workforce, and save on the cost side of the business. In small and medium businesses their operations are not usually very large and may not see benefit of maximizing value/reduce waste on the operations side of the business.
I ran into this issue working with a veterinary clinic. The owner and employees didn’t think they would get much benefit to the bottom line by going through exercises that maximize value for operations but we still did the exercise.
When digging into the different value streams we found an interesting nugget. Over the past few years 20% of the animals in the area were diagnosed with heartworm. When your dog or cat gets heartworm it’s easily a $1000+ procedure that is painful for the animal, it’s not 100% guaranteed to work, and the animal will die from heartworm if not treated. Heartworm prevention is about $20-$30 a month which makes it much cheaper to prevent heartworms vs. treat for heartworms.
The employees came back with the idea of including a heartworm test with annual exams. This adds value for the clients in many ways:
1) They are informed about the risks of heartworm
2) Their pets are tested even if they are on prevention. Prevention is not 100% and if the animal has heartworms then the prevention company will pay for the treatment.
3) Since they are informed they now get heartworm prevention.
The results were better care for the patient and it has increased the sales of heartworm medication by 50% in the clinic. This is a win for all sides. How do you add value in your business?