Three Ways to Create Improvements

Off the Cuff --- Three Ways to Create Improvements

#1. Best Practice - Simply stated, “best practices” are business operations that are commonly used by financially successful companies. The identification and study of best practices is now widespread and has contributed to significant operational improvements in many industries. This powerful tool originated from a simple, almost obvious premise: at some level, most business organizations do the same things. Therefore, by examining those organizations that do these common processes extremely well, we can quickly find ways to improve our own business. Significantly, best practices offer a way to learn from any organization in any industry, provided that both organizations share a “common process.” Here are some guidelines to using best practices effectively:

• Remember that they are only correlated with good performance – be sure to use them as ideas for solutions rather than relying on them to fix problems that are specific to your company.
• Good sources for best practices include the industry press, trade associations, peers in other markets, information from suppliers and customers, and general business literature.
• Never blindly adopt a practice, even from a direct competitor, until you know exactly how it will work in your organization.

#2. Streamlining (Process Reengineering) can often help you discover process improvements. Streamlining refers to the act of removing steps and time from business processes. Because time usually equates to money, streamlining can often lead to significant bottom line improvements. The following are a summary of these principles:

• Document the way the process really happens, not the way it should happen.
• Evaluate every step in a process to see if it is really necessary.
• Avoid unnecessary hand-offs between people. This is typically a large source of error.
• When in doubt choose error reduction over speed. It is estimated that over 25% of the labor cost in the distribution industry is involved in correcting errors.
• Attempt to do steps in parallel (at the same time) rather than sequentially.
• Reduce variability processing time – even if all steps have the same average processing time, variability will always reduce overall throughput.

#3. Benchmarking is a simple concept that is too often overlooked. Tremendous insight and problem solving ideas can be generated solely by observing how someone else runs a similar business to yours. Benchmarking involves searching for the best way to perform specific tasks in all functional areas. It is all about trying to become the best of the best and employ best practices that can generally be observed at those companies that perform in the upper quartile of performance.

However, benchmarking can be valuable regardless of how the company you are benchmarking performs. Even observing less than effective functional performance can teach us something and may in fact validate the things that you are doing right. Of course, benchmarking top performing companies is the ideal situation. Looking for companies that use different methods in accounting, customer service, sales, marketing, operations and inventory management can provide tremendous opportunity to evaluate your own processes and procedures for improvement methodology.

There are basically four types of benchmarking.

1. Intercompany Benchmarking – This process analyzes the top performance in key functional areas and looks at applying it to other functional areas.

2. Competitive Company Benchmarking – This is the study of a friendly competitor that allows you to come into their business and observe their practices. Generally this can be done with competitors that are not in your geographical service area. Keep in mind, it involves quid – pro – quo by allowing that competitor to observe your practices as well.

3. Similar Company Benchmarking – This is simply observing a company that is not a competitor but may be in a similar or related business. Although products may be different, systems, process and practices are often the same. This can provide insight for improvements in your business.

4. Functional Benchmarking – This type of benchmarking focuses more on a specific function such as “inventory management” among any and all companies anywhere that may be willing to allow you to observe and learn. The key is searching for the very best methods to excel in that particular functional area.

Benchmarking goals should be centered on making your company the absolute best it can be based on the top performance of other companies. Focus on targeting newer companies in your industry. Older companies often have an innate resistance to change, new ideas and new technology.