Business Ready for the Recovery?
By Jay Arthur
Just like the seasons, economic busts turn into economic
booms. Whether the economy or the stock market has bottomed out is
irrelevant; one day soon the economy will turn around. Will your
business be ready to handle the increasing volume of orders smoothly
and efficiently, or will you find yourself back in firefighting
mode, scrambling to deliver?
While most businesses are whining about the recession, a few
are preparing for the recovery. They know that now while business is
slack, is the ideal time to tune up their operation. Don’t waste
this opportunity. If you want to be ready for the recovery, the time
has come to simplify, streamline and optimize your organization in
preparation for the future.
Step 1: Simplify:
years, every business collects clutter: unused materials and
machines that muck up daily operations. The solution: Spring
cleaning! Go through every nook and cranny and throw out anything
that is out of date or unused. Organize what’s left so anyone can
find it when they need it. Label the locations of all materials and
tools to make them easy to find.
Step 2: Streamline:
Businesses grow organically, not systematically. So they often look
more like a gnarly tree than a set of railroad tracks. This
convoluted workflow takes too much time and causes preventable
In any business,
walking is waste. Unnecessary movement of people, machines or
materials is wasteful and slow. Reorganize the flow of work to
eliminate unnecessary travel.
Remove the delays
between steps in the workflow. In most businesses, the product or
service spends 57 minutes out of every hour waiting for the
next employee to do something with it. When you look at the total
time from order to delivery, employees are only working on the
product or service for three minutes out of every hour (the 3-57
rule). When businesses eliminate the delays between steps, they can
reduce turnaround times by 50 percent or more, double
productivity and increase profits by 20 percent or more.
Companies that eliminate unnecessary delays also grow three times
faster than their competitors.
The mistake most managers make is looking at their employees
and thinking: “Our people are busy.” And they are, but the product
or service isn’t busy most of the time. When you eliminate the
delays and unnecessary travel, employees don’t have to work any
harder, yet the product starts working much harder. Eliminating
unnecessary delays and travel makes the company faster, which
delights customers. More importantly, they will tell their friends.
Nothing beats word-of-mouth to grow a business.
Hold onto this thought: Inventory is evil. Raw materials and
finished but unsold goods take up space, time and money. In most
businesses, some level of inventory is necessary, but companies
often stockpile materials they rarely need. Figure out how to get
them when you need them.
Shift to One-Piece
Most of us grew up learning about mass production and the economies
of scale. While useful at the time, the Toyota Production System has
taught the world about the economies of speed. If a customer
only wants one of your products, it doesn’t matter if you can
produce 10,000 quickly. They only want one and you end up with 9,999
in inventory (inventory is evil). Figure out how to redesign and
reconfigure machines and processes to produce one item or one
thousand quickly and easily. This simplifies production scheduling
and reduces time to deliver. Once the business operation is
simplified and streamlined, it’s time to optimize the process.
Step 3: Optimize:
Every business makes mistakes, errors or defects. Even
productive, profitable businesses can have 3-6-9 percent error
rates. Unfortunately, most managers blame employees for errors when
it’s not the people who are at fault. Instead, blame the process.
Processes let people fail. Processes can be setup to prevent
failures in such a way that anyone could do the job.
Everyone’s familiar with Pareto’s 80/20 rule: 20 percent of
the business causes 80 percent of the errors, but as little as 4
percent of a business (one step in 25) causes over 50 percent of the
errors (the 4-50 rule).
Categorize Mistakes and Errors:
take the time to count and categorize their errors, they quickly
discover where most of the errors occur. The employees who work in
that area can often figure out a way to mistake-proof the
process to eliminate most of the errors.
Mistake Proof the
makes it impossible for an employee to make an error. Examples of
mistake proofing surround us. Modern cars won’t start unless the
transmission is in park, and the driver has a foot on the brake.
Electrical plugs have a fat and slender prong so that people can’t
plug them in incorrectly. A spell checker automatically checked my
spelling as I wrote this article.
Any process can benefit from mistake proofing. It just takes
a little imagination to figure out how to change the process so it
becomes impossible to make a mistake.
Are You Recovery
economic downturn has been painful, it has also given every business
an unparalleled opportunity to simply, streamline and optimize in
preparation for the recovery. Could you use this time to become
faster, better and cheaper than the competition? When the economy
recovers, will you be ready?
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