If you went into your backyard and noticed the hose had burst its fitting and water was pouring full blast onto the ground, would you run to turn it off? Of course you would because it’s a waste of natural resource and also a waste of money. So why on a daily basis do we accept in our own businesses rework due to poorly designed processes, large stores of unused inventory, over servicing of customers or not having the right people. That is waste as well, it may not be as confronting as the tap but over time still has the same effect of depleting our business’s resource, cash flow and growth potential or alternatively presents the same opportunity of simply turning it off.
With an understanding of where waste hides in your business and repeatable, simple, well designed processes you can make some quick changes to remove waste, add more to your bottom line and lay a good foundation from which your business can grow.
Tip 1 Get it right the first time – Quality is a funny thing, it is so subjective and will be completely different depending on each individual customers’ needs. Get it wrong and it leads to defects, repair, rework and brand damage. Try to standardise your product or service with a clear description of what it is then ensure the creation process is simple, repeatable, measurable and mapped. If you can’t standardise and your business is more bespoke you must have a high level of regular customer engagement to ensure the needs have been captured correctly and you are delivering on them.
Tip 2 Doing more than you need to – Everyone knows that keeping your customers satisfied is the key to increased sales through repeat business and referrals however when taken too far can lead to over servicing, over production and depleting of valuable resources. Ensure you have set clear expectations with your customer and the scope of works or product specifications have been agreed, don’t be afraid to push back when this line is crossed and reprice based on the increase in scope. Try replacing over servicing with low cost high impact personalised value ads which can still bring the wow factor to your business offering and leave your customers feeling special.
Tip 3 Waiting – Sometimes it feels that all you do in business is wait, waiting for suppliers to produce things, waiting for customers to accept proposals, waiting to get paid. Nothing says waste like waiting. Try looking at who, what and where are your biggest bottlenecks, is it suppliers, can you renegotiate deliver times, is it banking, can you do more online & mobile transactions, it is customers payments, can you automate invoice follow up or take payments instantly from your phone. You’ll find that as you explore your waiting points there is always new automation or changes you can make to speed up the time from customer order to payment.
Tip 4 Do you have the right capability? – It’s critically important when hiring people who will work in and represent your business that you do so in a considered way, taking into account the business objectives, what the role to be undertaken is and what capabilities and behaviours are required to carry this out. If you don’t get this right there are significant amounts of time wasted managing underperformance, completing work that has been left undone or fixing up mistakes. Alternatively if you have highly engaged, highly skilled people who are being micro managed and not given opportunities to add real value to your business then this too is a waste of human potential. Next time you need a new hire try really thinking about what value they will bring to your business, write a role purpose statement and outsource to a specialised recruitment company. Reward your high performing people with additional responsibility and business mentoring, they could one day become part of your business succession plan.
Tip 5 Moving things – The more you move things the more costly it is, the longer it takes and the greater the chance of error. Moving things doesn’t just mean physical items such as products, samples or equipment, it also relates to people, information and data. Try going paperless, move things digitally to remove postage, consolidate suppliers to reduce hand offs for product manufacture, reduce unwanted travel time for you and your people, use teleconferences and Skype to engage long distance customers instead of face to face. Try storing information and files on a shared drive or a drop box instead of emailing or using thumb drives, use automated bank feeds (not statements) to reconcile your finances.
Tip 6 Inventory – Hold on hand the minimum you need to get the job done, don’t impact your cash flow by producing too much inventory which then needs to be stored, insured and written off if it goes out of date. Try the just in time principle of producing on demand, set expectations with your customers of delivery times, see if your suppliers will hold inventory on their books to retain your business.