When was the last time you looked at your business and asked yourself, “Why do we do things the way that we do?” Technology and product composition change almost daily, and if you’re not taking the time to periodically evaluate your operation from the most expensive machine to the most manual task, you could be leaving money on the table.
I want to quickly (remotely) guide you through your business so that we can find opportunities to take back your shrinking operating margins. Let’s break your business into two distinct parts for now: automated tasks and manual tasks. Take me to the newest, shiniest piece of equipment, we can start there.
There a few key questions I want to ask as we are approaching your machine: Are you getting the expected performance from this equipment? Has it caused any delays or defects elsewhere in your business? Is this machine helping you make money or making you lose it?
Because we can’t “unspend” your money on this machine, justifying the purchase is not what we’re talking about here. We need to ensure that it is actually performing up to the specifications that were promised. Too often, businesses are so awed by the purchase of new technology that the mere thought of ensuring consistent payback seems to border on the wrong side of sanity. They fell in love with the sales pitch and the numbers so much that they never stopped to question whether they got a return on their investment.
It’s possible that while the machine you purchased is performing as intended and saving you money in one sector of your business, it costs you double in defects and delays in two others!
I need to be honest with you: it’s possible that you could end up making more money if the machine was idle.
This analysis, as painful as it may be, needs to be followed for each machine in your system. You may find some that could benefit from updated technology and others that are extraordinarily over- or underutilized.
The key lesson is that you cannot know you are getting value unless you monitor the various inputs, throughputs and outputs – and the cost associated with each. Now, let’s move on to your manual tasks.
WARNING: Manual tasks can be intimidating if you are unsure of the actual value added by the task. So, first familiarize yourself with the methods and objectives of the task. Not only will this help you understand the job setup and demands, but it will also help you make it better.
Now, let’s look at those people over there. I want you to ask: “Why are we doing the job this way?” Ask as many or as few people as you’d like.
You may get answers like: “the process and tasks were optimized by an engineer a while back” or “the management team studied and developed the process last year.” Both are positive responses to which I would only encourage you to re-visit the process to ensure that the setup still meets your needs. It’s possible that new technology could help improve your operations.
“We’ve always done it that way” and “I’m not sure” (fraternal twin “I don’t know”) are the most alarming phrases when talking about processes and tasks associated with your production. What this means is that what you are observing has either never been studied and justified or that it has been so long that no one is sure why it’s necessary.
In many cases, the evolution of your manually tasked workforce has not kept pace with that of your growing business. Sure, maybe you have more employees performing the task but that doesn’t mean the task is still important. You have to first determine if the task adds value to your business. If so, did you really need more manual effort or can any of these tasks be supplemented with automation to improve output without sacrificing quality? Are there other things you can do to make this necessary manual process as efficient as possible without another large capital investment?
Like automation, manual tasks must be monitored and measured to ensure that you are getting the results that you and your customers expect. Planned, periodic assessments are crucial and, in some cases, using an external firm may be required to ensure unbiased results or to introduce new ideas.
Walking through your business and asking these tough questions can sometimes feel like looking in the mirror after the winter holidays. The answers may not be the best reflection of who you want to be but, with the right planning, you can get your operations back in shape.
Greg Melroy is a Project Manager in West Monroe Partners’ Operations Excellence practice.