• Operational Improvement is Sexy (Again!)



    My wife thinks that I’m crazy…all because I feel gloomy about the economy, and yet at the same time, I feel invigorated to achieve operational improvement. Why? I’ve ridden enough financial meltdown rodeos to be able to recognise the warning signs. In case I’m right, we should start using our 20/20 hindsight and look for the positives that came out of past crises.

    The Trend of Operational Improvement

    A reoccurring trend that can be identified with financial downturns is that, when both company sales and profits decline, the spotlight is shone brightly on operations to deliver solutions. It’s a bit like likening “operations” to being the engine in a car. Only the mechanics are interested how it works until there is a problem, and then everyone wants to look under the hood!

    The time before a storm hits is a great time to start reflecting on what we can do to make our businesses stronger, safer and more robust. In other words, to start pointing that spotlight under the hood right now.

    Forewarned is Forearmed

    In an economic downturn it is tough to increase profit, and generally, it’s even tougher to increase sales. So it makes sense to look at bringing costs down. The worst that can happen is that we increase profitability without having increased sales. The best that can happen? The chance to be in a more robust position if we hit turbulent times.

    So, where does this lead us? Start by taking a good look at your current operations and where you can start to implement some best practice. Here are four of my personal favourites for operational improvement:

    • Process Improvements – Often we do things the way we do them because it’s the way it’s always been done. Look into alternative approaches that can save both time and cost.
    • Supply Chain What have you done to see how resilient your supply chain is and what could the consequences be if one of your key vendors runs into issues.  Now is a great time to review your Plan B options for each supplier.  Also, look at on-shoring options, you may be delighted at what has happened to North American prices & quality over the last few years.
    • Inventory – When you look around your company, what items do you have lying around that have either not been used for more than a year or have sat on your inventory shelf and not turned? Take the opportunity to convert these unrequired assets into working capital. Think about auction houses/Ebay/Craigslist or “blow-out sales”.
    • Grants/Funding – Look at what funding maybe have been overlooked previously. There are many sources that could be open to you from SR&ED to IRAP. The purposes range from support for developing new product lines or markets to making capital purchases or upgrading IT. The funding will generally be linked to activities that support your company to improve/become more effective.

     

    While I sincerely hope that the global economy doesn’t hit another road block, what do you have to lose by taking a good hard look at improving your operational efficiency? Don’t forget, terms like: “delayering”, “just in time” and “right-sizing” were all introduced in downturns – don’t let them be used in your company.

    And just remember, every dollar you save can flow straight through to your bottom line.

    Why not join nine operational excellence and process improvement experts at Incrementa’s Manufacturing Conference (from Oct 24-28) for practical strategies on how to optimize your manufacturing business. Register here today.

    Ralph is a detail-oriented leader who gets things done. As a partner at Incrementa Consulting, he ensures there are no gaps in which execution can fail. You can connect with Ralph on Twitter or read more of his thoughts on the Incrementa website.

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