The business climate today points to an increasingly challenging market environment, and depending on how you manage this will determine how performance can be significantly affected either for the better or the worse.
The challenge of meeting increasing costs, quality of services, statutory regulations, and customer demands against a background of increased competition from both national and international suppliers often stretches already limited resources.
By using a simple ‘Risk Mitigation’ chart along with the benefits of ‘Lean’ strategies, you will be utilising tried and tested policies which will provide tangible, sustainable and speedy benefits for your organisation.
There are three (3) main areas of business risk mitigation I have utilised and made it easy when assessing where a business currently stands and where we need to focus to turn around performances to achieve sustainable growth and profit.
- Dire Consequences = Stop operations and critically assess whether there is still a way forward.
- Ongoing cash flow problems
- Unable to meet statutory expense obligations
- Excessive variances to budget
- Inability to meet loan repayments
- No programme of cost reduction, cost avoidance or continuous improvement
- No strategic business plan
- Too reliant on one (1) client
2. Warning = Caution
- Intermittent delivery interruption or not meeting client commitment dates
- Increasing material costs
- No control of scrap costs
- No understanding of ‘Total Cost of Quality’
- No customer feedback review
- No measure of cost reduction strategy
- Excessive absenteeism
- Excessive labour turnover
- Excessive overtime as a % of total hours worked
- No employee development programme
- No customer return strategy No supplier assessment programme
- No employee health & safety programme
3. Sustainability = Proceed
- Full management of cash flow
- Measure of each project/job contribution%
- Full use of effective KPI’s
- Best practice inventory stock control system
- Excellent relationship with clients
- Excellent relationship with suppliers
- Total control of operational cost efficiencies
- Multi-skilling programme for all employees
- Commitment to ‘Best Practice & Lean Operating priciples
- Flat seamless operation/organisation structure
- No areas of grey in the organisational structure
Lean Operations
Lean operations will typically identify some ‘low hanging fruit’ that will enable substantial benefits to be realised and recognised over the short to medium term. This is an important motivator for both management and employees to see results from their combined efforts and communication-
Listed below are some of the benefits that are both tangible and measured:-
- Improved profitability and ROI
- Reduction in inventory
- Reduction in rework and scrap costs
- Increased client satisfaction
- Quality improves as defects are reduced
- Improved efficiencies as cycle times reduce
- Reduction in client lead times
- Sustained atmosphere of continuous improvement
- Motivated staff who are committed to change
- Ownership of the plan/strategies by all employees
- Enhanced communication at all levels of the operation
Operational improvement will be an outcome of making all employees feel they are an integral part of the decision making process including them seeing there is a development programme which increase their skills base.
