By Iqbal Thokan
Measure the costs of your business. Improve the efficiency of your business to lower the operating costs and improve on the bottom line. Resources can be a limitation to growth, but using limited resources efficiently can be a great strength for growth. Over the last few weeks we have come across many business giants closing down or liquidating, while there could be various reasons for this, one of the major contributing factors is the costs associated with operating the business. COVID19 has brought about many challenges and now more than before as businesses we need to find unique and creative ways of making our businesses more efficient with the limited resources we have. Run lean and we can run far, run fat and we tire easily. Efficiency can often be confused with making a profit or keeping our customers happy or meeting certain sales targets. However, this is a misconception as efficiency allows us to make use of resources in a productive way that allows us to be sustainable and thrive. A business that is operationally efficient allows us to be agile while saving on valuable resources that can be put to use effectively during a time of crisis. Operational efficiency allows us to save in the purchasing of products, or be in better control of our stock in order to reduce stock losses or controlling our expenses and can even lead to cost saving ways of doing sales and improve the productivity of our team.
Another misconception is that in order to achieve efficiency we need to reduce the number of people in our business. As mentioned previously, people are power, and as business owners we need people to do the tasks that take up our time, allowing us to work on guiding the business rather than continuously fighting fires. People efficiency is all about having the right hiring processes in place and hiring the right people and ensuring we have the right systems for the right people to operate efficiently.
I always think of a business within a snowball and in order to be able to work on the efficiencies of our business we need to be able to step out of the snowball and look at our business practically from an external point of view. If we are continuously stuck in the snow ball it is very difficult to see where the business lacks in efficiency. An efficiently operated business allows us to improve on our margins and the size of the profit which in turn allows us to maximise what we are all after, the cream, an increased return on investment.
Another misconception is that to achieve efficiency we need to heavily invest in resources, while it might be the case for some businesses, for example those in manufacturing, for most traders it is all about a shift in our thinking and finding new and creative ways of doing things. This requires us to not only know our products and services but to also know the entire situation of the business, from the internal landscape right through to the external landscape and the only way to do this in the most effective and efficient way is to continuously update our information with useful and relevant information. Attention to detail and using technology to our advantage can also help us become more efficient. While there are some great technological tools out there, some of them can cost an arm or a leg, however, if we search and look hard enough we will always be able to find a solution that is within our budget.
One of the greatest stories of operational efficiency can be seeing in one of the giants in businesses today. In 1867 a great visionary and a mind focused on problem solving was born in a small city in Japan. Sakichi Toyoda was an inventor who started out making hand looms and by the time he passed on in 1930 he had developed eight thriving businesses which would be the foundation for the development of the Toyota motor company by his son Kiichiro Toyoda. Sakichi was a man devoted to innovation and problem solving and this philosophy and value was passed on generationally; making Toyota one of the most efficient run businesses in todays time. Two of the ways that Toyota achieves this is by focusing on its hiring process and hiring the brightest workers and by challenging them constantly solve problems in an efficient way.
Being efficient requires us to understand the inner workings of our business while guiding and building it by working on our business. A business that is run efficiently is one that is able to stay relevant, survive and thrive.
Iqbal Thokan is an experienced business management consultant and the founder and co-owner of breedingpositivity.com
All companies should seek to be efficient, but some of us still don’t really understand what it means to be efficient. Many entrepreneurs confuse efficiency with “achieving targets.” They believe that, if a company manages to fulfill its commitments, in terms of its finances as well as its customers, that makes it competent, but that isn’t true. In this post, we’ll teach you how to increase the operational efficiency of your company by listing a few actions and points to pay attention to.
What is operational efficiency? Why is paying attention to this so important to your company? Find out in this article!
What is operational efficiency?
The concept of operational efficiency encompasses the practice of improving all of your processes (all your company’s activities that lead to your final product or service). For example, a supermarket has various internal methods (of production, hiring, sales and communications, for example) and all of these processes help the company achieve a target, which may be in terms of product sales.
But even if the supermarket is hitting its sales targets, this doesn’t mean that it has achieved operational efficiency. Bad stock control can lead to the spoiling of products and losses for the company. If the purchasing department isn’t able to efficiently identify the ideal suppliers, the supermarket is missing out on a chance for big savings. Thus, these examples illustrate the importance of knowing your company well, because the bottom line is that each venture possesses its own reality in terms of its processes.
How can you achieve operational efficiency?
As a businessman you should list your company’s processes and follow them to discover whether they’re being performed in the correct manner (generating profit, offering quality and avoiding waste, for example). If you are able to identify failures in your processes, try to study alternatives to improve them.
Is your company experiencing losses due to employee performance?
It’s not unusual for businessmen to believe that seeking operational efficiency is directly linked to laying off workers. This isn’t true. Pay attention if you’re able to identify losses due to employee performance, because you may be running your hiring process in an incorrect manner, or in other words, your company may be hiring the wrong people for the functions you need to perform.
In addition, you may find that you need to create or improve your employee training processes. Seeking quick cost savings through layoffs is usually an inefficient solution – you’re removing the person but not the process or activity that he or she is performing (which frequently is not adding value to the company and then is performed by other employees – which frequently just overloads them). Also laying off employees is a temporary solution, which may not help in the medium or long term. The best strategy to improve operational competence depends on analyzing the results of each company department rather than careless cost cutting.
Businessmen should pay attention to all of the business’s results
First of all, seeking operational efficiency consists of knowing your own company. You should also pay attention to all of your business’s results and not just the final results. Don’t confuse efficiency with cutting costs, because it has other objectives besides savings, such as improving your company’s productivity. This is why associating it with layoffs is a mistake.
What are the advantages of investing in operational efficiency?
The quest for operational efficiency is to identify problems and create solutions. There is no point in knowing that a certain process is not happening in the best way possible and taking no action to reverse it. The key is to understand that every challenge encountered is actually an opportunity to be better every day. Although some amounts need to be invested, they should never be considered as costs. These are investments that will surely bring returns. When a company provides personnel training, for example, it is enabling people to perform the service in the best way. A team that has good communication tends to keep goals and expectations aligned, which makes everyone work for the same purpose. Purchasing processes and the finance department can also be positively impacted by operational efficiency. With it, employees optimize their time and the company gains productivity. Needless to say, from that point until increasing profits and raising your market levels is just one step.
How to achieve this efficiency?
While you may have already understood why you should deploy operational efficiency in your business, you may still feel a bit lost, not knowing exactly where to start. To help you, we’ve listed some valuable tips below:
Study the business situation
In order to correct unsatisfactory processes, it is necessary, first of all, to discover what these processes are. Only then it will be possible to improve them. To do this survey, the manager should talk to the people who head departments and evaluate the conditions of the company in the market in which it operates. It is only after a few reports and reflections that a conclusion can be drawn.
Pay attention to production costs
Every production generates a cost. However, it is important to know exactly how much resource, manpower and time each process requires. This way, it is easier to identify outlier expenses. Once identified, one must find out the reason to seek a correction that allows the reduction of costs without losing quality.
Map process failures
Analyzing each process, piece by piece, also allows the identification of failures. They need to be measured and related so that it is clear where the changes should happen. Of course, theoretically everything can be improved, but you need to know what to prioritize when fixing problems.
Discover the source of failures
There is no point in knowing the failures if you do not know where they come from. Whenever a failure is identified, it is important to find out its origin and why it has occurred. This way, it is possible to correct the problem from its root, avoiding the creation of illusory solutions that only mask inefficiencies in the productive process.
Nowadays, there is a technological tool for everything. You can store data, integrate departments, and create reports that allow for a broader analysis of the company’s situation. Performing this whole process manually would certainly require a much longer time, in addition to leaving you susceptible to failures. That’s why we often say that technology is a great ally in achieving operational efficiency. Did you understand what operational efficiency is? Did you like our tips for practicing it in your company? Then like our page on Facebook and keep up-to-date on other contents like this.
Improving efficiency is a key concern for executives, and a goal for many technology initiatives and implementations. The results of RSM’s recent Technology Bulletin survey emphasize the importance of these efforts, as more than 65 percent of respondents want to learn more about becoming more efficient. To that end, the following four case studies show how companies can utilize technology to discover efficiencies, increasing revenue and creating a competitive advantage.
Integrating workflows and reducing manual processes
A large metropolitan municipality utilized a legacy paper-intensive and batch-oriented integrated financial system, and required a more modern solution. Change was necessary to effectively support the business and technology environment and comply with evolving regulations. The city sought a platform that accomplished five major objectives:
- Increase efficiency and effectiveness of business operations
- Provide easy access to real-time data
- Allow for more transparent business processes
- Improve internal and external customer service
- Migrate from a paper processing environment to an analytical environment
Increasing efficiency by connecting business groups and systems
A specialty medical rehabilitation hospital utilized manual, inefficient processes for critical communications, creating a siloed environment between departments. These applications did not provide consistent data validation or reporting tools for management, impacting efforts to introduce initiatives and slowing information to the referral network. The hospital required a system to:
- Connect group access across departments
- Improve productivity and plans for referral outreach communications to physicians, case managers, nurses and therapists
- Provide remote access and enhanced reporting tools for management
Streamlining processes help make better decisions
A state housing finance company required more consistency in its decision-making process for more than $4.7 million in annual grants. The agency knew the criteria for distributing funds, but needed better tools to control the application and decision process and make clear final decisions. To be more upfront and confident with conclusions, the agency sought a process to:
- Refine the initial application and redefine staff roles and responsibilities
- Develop a scoring sheet and scoring model
- Update policies, forms and procedures
- Modify the audit process to review how grant monies are spent
- Identify key performance indicators
Process improvements turn growth into profit
An industrial products distributor with $30 million in sales was growing, but the bottom line was shrinking. Products were often stocked wherever they would fit, complicating the picking process and leading to incorrect cycle counts and incorrect customer orders. The company’s processes needed improvement, but even existing guidelines were not documented or followed on a consistent basis. The company required several process improvements to:
- Reorganize warehouses for maximum accuracy and efficiency
- Install a bar-coding system to improve order accuracy
- Rationalize delivery routes by analyzing profitability of current routes and implementing best practices
- Instituting a quality control system based on ISO 9001 guidelines
“Standard work output is a goal that depends upon having a standardized way of doing the tasks in a organization. This also requires a production cycle with predefined connections between customers and supplies.”
Ivan Luizio Magalhães
In today’s world, both organization and business accelerates at such a fast pace that everyone wants to do more in less time. This type of increased productivity is also the definition of efficiency for some.
Here are tips for anyone looking to improve the operational efficiency of their organizations:
Focus on your customers – Working on the things that matter the most to customers makes any operation effective. In Mr. Drucker’s terms, this equated to doing the “right” things.
Ensure that strategy, plan and day to day priority is aligned with customer needs – By capturing customer needs through their feedback and translating critical customer requirements into key metrics, an effective management system is put into place.
Direct resources and focus toward the most critical customer service metrics and indicators – Learning that to only focus on efficiency for the purpose of improving efficiency will not provide the right results is painful. Naturally efficiency is gained by not wasting energy on less important things.
Set the right efficiency measurement to guide continuous improvement – The best improvement comes from continuous progression toward a meaningful but ambitious target. A good target usually is not easy to attain yet has the key stakeholders excited about it. There’s an old adage that says, “You can’t manage what you don’t measure.” One consistent process among top organizations was the integration of a system for measuring performance. Measurement requires continuous feedback to guide a organization’s planning efforts, and it provides a basis for selecting what improvements to make first. The gamut of measurement tactics can range widely. A sheet of paper used to tally the number of jobs run is a simple example, while electronic counters and computer software can automate the process and capture real time data. SWOT (Strengths, Weaknesses Opportunities, Threats) analysis, action plans, and balanced scorecards are other tools used to not only to measure but also to improve performance of the most successful organizations.
Effectiveness and efficiency go hand in hand – A leader should never lose sight of efficiency measures, yet his or her utmost important mission is to keep the organization effective. Do right things the right way!
Audit – Periodically auditing your practices and procedures will help weed out the ones that are no longer working. It will also help improve those that are working but could be more efficient. Ask your employees to help with this process. It can be frustrating for employees to be handed a procedure that they will have to utilize everyday with no ability to comment on its effectiveness or potential improvements.
Ensure the procedures you put in place help your employees be more efficient and ask for their feedback on the process.
The people with the hands on experience are the ones that can help you determine what will make things faster and easier.
Document Control – The ability to find necessary documents as easily as possible is a crucial part of operational efficiency. Finding the most current variation of any particular piece of paperwork – contracts to drawings to specifications – can help keep you on your critical path. Keeping your organization is organized is key!
Document revisions can also be important, depending on your type of organization. If you sell services or goods that will require service in the future, knowing exactly what the final product the client ended up with is important when supporting them later.
Procedures for document control start from the top down. Set a good example and document control will be easy!
Consistent Procedures – Consistency makes for efficiency. Creating and maintaining consistent procedures throughout your organization operations will help keep everyone on the same page, cutting down on confusion and rework. A simple plan of how to properly dispose of information properly, is an example of how to keep consistent procedures.
When procedures are consistent across the board, training employees is easier and assessing performance is a snap.
Small Steps – Nothing is going to be perfect right away. Small, thoughtful steps in the right direction will get your organization up to its optimal operational efficiency.
As technology evolves and becomes more applicable to your organization, you may be inclined to rush into upgrading and swapping all your systems over right away but taking small steps to ensure efficient integration of these technologies will likely be better for your organization in the long run.
Adequate training on new technologies with enough time for cross training is an important part of implementing new processes.
Make it Visible – If we don’t know something is wrong, how will we know it needs fixing? All too often we hide the pile of statistics and data away from our agents of change – our operators and sales persons; those who are in the best position to influence change. The second practical observation of top organizations is their consistent and prominent display of performance measures. Opportunities to display pertinent data for your workers abound whether it is shown on their desktop, viewed on a mobile device, or featured across a big screen monitor. Visual dashboards place data in front of people with their feet on the floor and their eye on the prize; these kinds of visible metrics keep employees accountable by displaying progress toward individual, team, or organization goals. It’s highly effective for everyone to see all the data all the time.
Build & Document Processes – If it’s not documented, it doesn’t exist. There’s nothing worse than realizing too late that integral steps in your procedures were skipped or simply forgotten. Documentation is another performance task that may take some time, but pays significant dividends in the end. Leading fabricators have become proficient at documenting processes and procedures not only to provide consistent performance, but also to meet the demands of a changing workforce. The pool of skilled operators in our industry is aging. Long term employees are leaving organizations, taking with them invaluable years of experience. Younger professionals are changing positions more rapidly and bringing with them more technical expertise. As the next generation of skilled employees takes the floor, documentation will provide a road map for creating long-term process improvements.
Continually Improve – The saying, “If you’re not moving forward-you’re moving backward” is more relevant than ever before. Those organizations that have instilled a culture of continuous improvement tend to outperform the competition. The rapid broadcast of quality management ideologies has created positive change throughout the industry – those who are unable to implement them are often left behind. At risk are yields in improved quality, increased utilization, shorter production times and decreased costs. Today there are numerous resources to help your organization on its continuous improvement journey. Still, be mindful of the fact that one size does not fit all. While philosophies like Lean Manufacturing and Six Sigma are both popular and proven, they can also be costly to implement. Don’t be afraid to seek out additional opportunities that might be a more realistic fit for your organization.
Make it Everybody’s Organization – Opportunity is around every corner. Improving efficiency must be the job of everyone in your organization to be effective. If you leave efficiency up to a single department, you might miss out on valuable insight. Breakthrough innovation comes from a culture that encourages employees to make a personal commitment toward the successful future of your organization. The most efficient manufacturing organizations keep everyone abreast of both immediate and long-term goals, encourage input from every level, and often build reward systems that inspire breakthrough thinking.
Improve Cross-Departmental Communications – When divisions exist between various departments within your organization, it’s impossible to experience optimal efficiency. The first thing you need to do is ensure all team members, departments, and groups have open lines of communication between them. One tip is to develop cross-functional hybrid teams that consist of employees from different departments. These teams help close gaps and give each department representation.
Use and Update the Right Technologies – Keeping your technologies updated plays an important role in your organization’s ability to remain efficient and relevant. Just having the right technology isn’t enough. It actually needs to be updated and improved on a regular basis. Otherwise, these tools and resources will become more of a hindrance than a benefit.
Identify and Overcome Bottlenecks – In almost every case, there is an identifiable bottleneck at the root of operational inefficiencies. Successfully finding and removing these bottlenecks is the key to improving.
The theory of constraints is an important tool that many organizations use to improve their processes. While Eliyahu M. Goldratt popularized the theory in his famous book The Goal, the theory is actually used by thousands of organizations in many different industries. It consists of a five-step process:
- Identify process constraints;
- Decide how to exploit the process constraints;
- Subordinate everything to these decisions;
- Evaluate the process constraint; and
- Remove the constraint and then reevaluate the process.
If you feel like there’s a bottleneck holding you back, it would be wise to study the theory of constraints in detail. You can learn a lot from this idea.
Create Incentive Programs for Employees – While a organization can spend a lot of time focusing on improving operational efficiencies, the reality is that growth happens on the ground floor. Unless your employees are on board, you won’t be successful.
One of the best ways to implement a plan for improving operational efficiency is to directly tie it to an incentive program. Rewards give employees a vested interest in the outcome of a project or task. As such, it’s helpful to give employees something they can tangibly enjoy.
Streamline and perfect your internal business processes – Being a small or medium-sized organization does come with its advantages. One advantage is the ability of smaller organizations to react more quickly to issues compared to larger competitors. This is especially true when smaller organizations choose to outsource internal processes. By choosing to work with a specialized Business Process Outsourcing (BPO) organization, they work to streamline your business processes for you. As a result, your organization is able to cut processing costs, increase productivity and reassign employees to others areas of your organization.
Improve your customer service – How can you improve your customer service? It’s actually very simple. By streamlining your organization, increasing productivity and decreasing processing errors, customers will be happier and more satisfied by receiving a smoother transaction. IT performance, HR functions and financial services are some of the most commonly outsourced business process functions today. Deciding to hire an Business Process Outsourcing (BPO) expert to process non-core business functions typically leads to far better customer service, increasing your positive organization reputation.
Focus on your core business – Some large organizations make efficient, secure business processes a prerequisite for doing business with them. This means your organization must process data to their standards. With ever-evolving technology, this can be very costly. To increase efficiency with these business processes that meet the requirements of your partners, your organization needs a secure, reliable network infrastructure. By working to streamline your non-core internal organization operations through outsourcing, you are then free to focus on the fundamentals and core structure of your organization. Typically, organizations who have a plan and keep it updated are most likely to streamline their operations, thus outperforming the competition. Without focusing on redundant processing tasks, such as check writing and check printing, Electronic Data Interchange (EDI), third party billing, rebate fulfillment, barcode labels, Human Resource (HR), Information Technology (IT) and more, organizations are then able to direct their focus to the work that really matters and defines your organization. In the end, streamlining your organization allows you to increase work flow/productivity, decrease internal processing costs, manage projects faster and make customers happier.
Ensure your team has continuous access to organization information – Continuous, uninterrupted access to accurate, real-time information is critical. Your employees should be working on one system – not multiple, separate systems. Sharing one database will ensure your team is working with the same information in order to make accurate, quick decisions and effectively complete tasks. To ensure your team has continuous access and doesn’t encounter any downtime throughout the day (or loss of data), make sure you have a business continuity and disaster recovery solution and plan in action. Never skimp on a good business continuity solution!
Make it possible for your remote workers to access organization info from their mobile devices – To make sure your team (even those working out of office) have access to your management system (organizational information) at all times. Sales reps visiting customers will be able to input orders right away into the system from their mobile device (by logging into your organization’s mobile business application); this ensures orders are accurate and can be processed quickly. Customer satisfaction will definitely see a boost with this tip!
Create efficient processes with Trading Partners – Receiving an email or fax with your partner’s purchase order and then manually inputting it into your management system, only to manually create and send back an invoice cannot be any more ineficcient. It’s time you look into EDI in order to send and receive partner messages electronically. EDI documents, like Purchase Orders, Invoices, ASNs, can then be converted to XML/CSV in order to be automatically integrated into your management system – reducing any human intervention.
Develop & review a technology plan every year – Technology is continuously evolving. Your business requirements are constantly changing as well. Your organization’s hardware and software will need to be re-evaluated every so often to ensure these IT solutions align properly with your organization objectives and requirements. Every year or so, depending on how fast your organization grows, you can sit down with an IT consultant or your IT Provider to determine what your organization may be missing in order to stay competitive and efficient. Perhaps it’s time to upgrade your system, simplify a few processes, bring in process consistency and standardized procedures, implement a Business Intelligence & Analytics tool and more. Develop a technology plan for all this so years don’t go by before you realize you’ve hit a wall and need a whole IT revamp that can have major disruptions to your organization.
Schedule – A clear schedule will keep you and your employees aware of the expectations you have for how they spend their time. Keeping a schedule will help make sure your bills are paid on time and your customers’ needs are taken care of. It will help forecast resources you may need as well as allow you to help schedule your personal life – everyone needs a vacation!
Maintenance – Maintaining your organization’s assets is important. Whether or not its equipment used to manufacture your product or simply the printer/copier used by the office staff, keeping these items operational is critical to organization running smoothly.
A little time and money now will help keep costs down in the long run – It’s better to maintain equipment as you go than pay for a complete breakdown when things finally fail.
To remain competitive in an increasingly competitive world, businesses must boost operational efficiency wherever possible. “Sooner or later, any company not operating efficiently will be out of business,” says Laurie McCabe, vice president of small and medium-sized business (SMB) insights and solutions for research firm AMI-Partners. It’s particularly important for SMBs to operate efficiently, McCabe adds, because they often have more limited resources than larger enterprises.
The following are 10 tips for using network technology to help your business increase operational efficiency, reduce costs, improve customer satisfaction, and stay ahead of the competition.
- Provide employees with secure, consistent access to information. One advantage of being an SMB is the ability to react more quickly than larger competitors. But if your company network is frequently down, sluggish, or unsecured, that competitive advantage is eroded. A secure, reliable, self-defending network based on intelligent routers and switches provides your business with maximum agility by providing reliable, secure access to business intelligence. What’s more, a secure, reliable network infrastructure provides the necessary foundation for a number of efficiency-enhancing technologies and solutions, such as IP communications.
- Deliver anytime, anywhere access to mobile employees. SMB employees are typically more mobile than those in larger enterprises, says Jan Dawson, research director of Ovum Research. “Ubiquitous access to people and information is particularly important for SMBs,” in order to be productive while on the go, he adds. Technologies enabling ubiquitous access include virtual private networks (VPNs), which securely connect remote workers to the company network, and pervasive wireless networks, which enable workers to stay connected to the network while roaming about an office building or campus.
- Create effective business processes with partners. Some large enterprises make efficient, secure business processes a prerequisite for doing business with them. To develop efficient business processes that meet the requirements of your partners, your business needs a secure, reliable network infrastructure.
- Make it easy to collaborate. Effective, interactive collaboration between employees, partners, suppliers, and customers is a sure-fire way to boost efficiency while also reducing costs. Integrated voice, video, and data and wireless provides the kind of interactive calendaring, videoconferencing, IP communications, and other technologies your business needs to foster seamless, easy collaboration.
- Enable employees to take their phone systems wherever they go. Missed calls create any number of business challenges, including operational inefficiencies (from trying to reach absent colleagues), project delays, missed opportunities and lost revenues. An IP communications solution enables your workforce to have one phone number that simultaneously rings on multiple devices, greatly increasing the chances of being reached on the first try. Workers can access their entire communications system wherever they go and can check e-mail, voice mail, fax and pages all in one inbox, among other benefits.
- Streamline communications with customers. Interacting with customers efficiently and knowledgeably helps keep them satisfied—and few things are as important to your bottom line as satisfied customers. Linking an IP communications system to a customer relationship management (CRM) solution is one way to enhance customer communications. When a customer calls, a pop-up window of the customer contact record appears on an employee’s IP phone screen, computer screen, or both. Before the second ring, the employee answering the call has access to information about the customer calling, such as orders pending and recent returns.
- Reduce unproductive travel time. Any time spent traveling, particularly by airplane, can dramatically reduce operational efficiency. An IP communications solution that offers rich-media conferencing, such as videoconferencing, helps reduce the need to travel to offsite meetings and training sessions. The time saved from traveling can be better spent on more productive pursuits. Also, reducing travel saves money.
- Outsource IT tasks. Is it the best use of an employee’s time to manage your network security or IP communications system? Often, a more efficient option is to outsource such tasks to a managed service provider. A service provider has the expertise that your business needs but may lack, without the need to spend time or money developing that expertise in house.
Also, outsourcing enables your employees to stay focused on productive activities related to your business’s core competencies. And that helps keep your business competitive.
Outsourcing tasks can help improve customer satisfaction and your competitiveness. “A lot of small businesses think it’s cheaper to do everything themselves,” says AMI-Partner’s McCabe. “But employees can get overloaded, and they may not be in a good mood when interacting with your customers.” McCabe adds that SMBs often don’t do as good a job at an IT task, such as IP communications, as a managed service provider would do for them. “And if you’re not doing a good job at something, your competition probably is,” she adds.
- Improve employee retention and satisfaction. When your business has inefficient processes, such as antiquated phone systems or a sluggish network, employees can get frustrated, because they can’t get their jobs done with the tools provided. Customers may perceive that frustration and lose confidence in your business. Even worse, valued employees can become burned out and decide to move on. Not only have you lost a productive worker, you must spend time and money hiring a replacement. To help ensure employees are productive and satisfied, your business needs, at a minimum, a secure, reliable, always-available network.
- Develop a long-term technology plan. Whenever you replace hardware that has become obsolete or ineffective, it’s disruptive to workers—and that results in low productivity. You can minimize or eliminate such disruptions by carefully determining short- and long-term business objectives and the carefully mapping technology solutions to those objectives.
“Every year, you should try to determine how well your technology solutions map to your business objectives,” McCabe advises. Ask your value-added reseller, network provider, or other trusted adviser for help, she says. “The companies who have a plan and keep it updated are most likely to streamline their operations—and outperform their competition.”
As I conduct assessments at organizations that have made attempts to implement lean manufacturing, I consistently observe similar results.
The company has sometimes received assistance from an outside source, either in some form of training or kaizen event. There is a lean cell here and some form of a pull system there. Some attempts have been made at a 5-S implementation, with a couple of tool boards in place and a few documents posted that no one looks at.
Changeover time at some equipment has been reduced, and there is some form of a Total Productive Maintenance program with a preventive maintenance schedule that is not up to date. In truth, however, such companies are not truly implementing lean. This failure to implement the Toyota Production System (TPS), or lean manufacturing, is a result of management’s inability to create a true lean culture.
TPS, or lean, has been around for a few decades; the concepts and tools are not new. Companies embrace the lean tools but do not understand how they work together as a system. They will adopt a few of the lean tools but always fail to recognize the most powerful principle that Toyota recognized decades ago: A continuous improvement culture is needed to sustain lean.
At Toyota, everyone within the organization, from executives to shop-floor workers, is challenged to use their initiative and creativity to experiment and learn. We often hear labor advocates criticize assembly line work as being oppressive, and claim that menial labor robs workers of their mental faculties.
However, this could not be further from the truth with respect to lean. When Toyota sets up assembly lines, it selects only the best and brightest workers, and challenges them to grow in their jobs by constantly solving problems.
All areas of the organization (including sales, engineering, service, accounting, human resources, etc.) are staffed with carefully selected individuals, and the company gives them directives to improve their processes and increase customer satisfaction.
Toyota invests time and money into their employees and has become the model for a true learning organization. The importance of teams and teamwork is a way of life: team-building training is required, and it is put to practice daily. This investment in its employees far exceeds that of the typical organization that focuses on making parts and counting quarterly dollars.
So, what can companies learn from Toyota? The most important lesson is to develop a continuous improvement culture and stick with it. Organizations have a tendency to jump around from program to program based on the latest “buzzword.” It is difficult to build a learning organization when the program changes from month to month.
Companies must start their lean culture transformation with a philosophy of continuous improvement. The change must start from the top, and this may require an executive leadership shakeup. Everyone from the bottom up must be involved in the transformation. This includes training in lean principles, team building and problem solving. Use middle managers as change agents to drive the transformation.
To truly understand the power of a continuous improvement culture, we again look to Toyota. Toyota employees generate more than one million process improvement ideas annually. The more astounding number is the fact that 90 percent of those ideas are implemented. There is no secret to why this occurs. Toyota executives have created a culture that encourages and rewards this behavior.
Whether you are beginning or continuing your lean journey, the transformation to a continuous improvement culture is vital to your success.