Well good morning all and here is todays food for thought from London.

What do I mean by that question?

Commercial awareness is an element that should be at the heart of every individuals thinking within their business. Whether someone is a mom and pop store, a self-employed professional or the CEO of a multinational.

I have come across many managers, employees and businessmen who are running around trying to keep all and sundry happy, by ensuring the spinning plates are spinning without crashing to the ground. Yet, the cost associated with trying to cater to every whim of customers, suppliers and internal departments means costs spiral out of control and the bottom-line is shot to pieces.

The newcomer or the new financial year starts off meaning well with stretching goals for profit and costs, yet as time goes by 'getting the job done' gets in the way. Focus becomes hazy and the dreaded dragon of cost raises its ugly head. Activities that add no value creep in, and extra service is provided without taking into account the cost implications.

Yesterday I accompanied a colleague to a mom and pop store, the owner of which was a friend of my colleague. After a brief chat we left the store and the owner walked out with us as he was going home, leaving an employee in charge. As the owner walked out of the door he grabbed a two litre milk carton for personal use. Now, this may seem harmless but such non-accountability can lead to huge costs and a gaping black hole in a businesses profits.

How often within a corporate environment do people think about how their actions can affect the bottom-line?

Some key elements that seem to be missing from the vocabulary and thinking of management and workers alike are:

1. Production / service provision cost per hour
2. Hours required per standard product / service provided
3. Availability in terms of service provision or production capacity
4. Lost / down time reasons and the cost in hours
5. Cost of non-value add but essential to production / service activities

These are only some factors that need to be borne in mind by individuals in their business life. In my opinion the key element is the education of all staff within a commercial enterprise. Education being of the cost of doing business.

What does it cost an enterprise to produce a product or provide a service. That education does not mean that all employees must become aware of accounting principles or be able to perform analysis of financial statements. It simply means making them aware of the cost of their departments and in most cases their actions.

Shah Alam