Managing a business relies on a network of systems and processes that are efficient yet flexible. They require careful scrutiny and evaluation to insure they include the right methodology and procedures. The art of accurately evaluating and tweaking your processes to improve your operations profitability is critical to building success and staying competitive.
Systems and processes are put in place to keep companies on course toward their profitability goals and to minimize surprises along the way. They provide a clear and consistent blueprint for how business is done on a daily basis and how decisions are made. Inefficient systems and processes are costly in terms of dollars, waste, rework, delays, resource utilization, whereas ineffective ones are pricey as well because they are not reliable. They don’t do what they are meant to do.
Use the right metrics
Management can’t comprehend the extent to which their organizations and processes are efficient and effective unless they choose and use the right metrics. The results of those measurements will help them improve the processes and the overall organization. This includes management processes as well as lower-level work processes.
Some process efficiency measures are:
- resources (dollars, time, labor) expended per transaction of unit;
- cost of poor quality result and rework;
- percent of time items were out of stock when needed;
- percent of on-time delivery.
Some effectiveness measures are:
- how well the output of the process meets the requirements of the end-user or customer;
- how well the inputs from the external suppliers meet the requirements of the process.
By contrast, measures of ineffectiveness include:
- defective products;
- customer complaints;
- decreased revenues.
For each of the metrics chosen, establish a baseline by rating the current efficiency and effectiveness performance levels. Regular monitoring and measurement will highlight strengths and shortcomings, allowing management to correct course on real-time.
Give voice to your employees
Employee feedback is very important since the best systems in the world don’t work well if the employees do not buy-on to its purpose and value. Working very closely with employees on design, improvement and implementation of processes is critical for employees to take ownership thus using them effectively. Depending the size of the operation, management can begin with a small group, work through ‘beta test’ and gather feedback, adjusting the processes as needed before company-wide implementation.
This collaboration enables management to incorporate important features and practices important to those that will be using it. It reduces challenges and costs of a low adoption and poor quality results.
Over time the right system, the right process and the right procedure change. Management is faced with two choices: stay the course and react or stay ahead and embrace change.
Technology and tools advance processes. Smart businesses search for ways to improve their efficiency with available tools and technology. If they don’t, their competition will.
The most valuable determinant of when and how much to change depends on what your market demands. Focusing on the customer is always a best practice to align systems and processes to meet their needs ultimately keeping your strategic advantage.
This decision point may be difficult as it may require financial resources to procure. However, failure to adapt and change holds a far greater danger. Over the years, there have been too many examples of the spectacular failure for not recognizing the need to adapt. For example, in 2009, BlackBerry controlled half of the smartphone market. Today that number is one percent! (cf. Losing the Signal).
Author: Carine Dieudé, Partner, Director of Strategy, specializes in growth strategies, systems and operations, for small and medium size businesses.
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