The next few posts we are proposing will address simple ways to look at your business and simple ways to achieve growth. But please, at all times, keep it simple.
There are only two ways
In essence, there are only two ways to improve profits, it is suggested both these initiatives be employed:
- Process Innovation – reducing costs whilst selling the same products
- Product Innovation – exploring new products and markets.
This post will focus on process innovation, whether it is in manufacturing, sales, distribution or marketing.
Process innovation is something every business should invest in, whether in the manufacturing or services sector. The Book, Think Again has the byline heading, “Invest in Process Innovation and Harvest Untouched Wealth”. How true this is because with processes there are always gains to be made that are risk-free if done properly, and there is no market risk, just more margin to be gained.
The most simple technique is called 5S. This in essence simply asks you to tidy up, organise, put things back in the right place and ensure everything is in proper working order. The Five S’s are Sort, Order, Shine, Standardise and Sustain.
Another common and easy to implement method is Kanban, a Japanese word for Visual Signal. This is a way of visualising and ordering workflow, often using a system of cards to represent stages of work as it moves through the facility. Kanban is an efficiency optimisation tool that properly used also leads to improved inventory management and “just in time” delivery. There is a great deal of material on this system on the internet.
Unlike what many people may believe, the ISO regime is not about creating quality products as such, but more about traceability of product development and manufacture. As you can imagine, this is vital in the food and chemical industry, but ISO has over years expanded to include all manner of businesses. Not to guarantee quality but to ensure all initiatives are documented and traceable.
This is a quality control system, with the Greek term Sigma (σ) being used by statisticians to signify Standard Deviation in a data set. The Six Sigma doctrine stipulates that no more than three samples in a million are permitted to be outside their specified tolerance limit. This is nice in theory, but if given as unfettered power of enforcement to quality controllers, can lead to huge disruption in manufacturing processes.
The system we also suggest is founded on the Process Innovation Matrix that employs just three “Seeds” or primary areas of focus, these being:
- Costs – What are all the costs separately identified in your manufacturing and business processes.
- Cycle Time – How much time is spent on each activity, leading to product and business cycle time.
- Quality – Defined as “Conformity to Specification” asks how quality may be affected by the push for process improvement.
The Process Innovation Matrix presents 10 ways to explore each of the Seeds. It is virtually impossible to explore each of the matrix intersections without identifying a breakthrough opportunity and thus, reaping that unharvested wealth.
However, before embarking on any process innovation we suggest it’s first necessary to measure and map the process you are exploring. Without that knowledge as a starting point, small changes made can have catastrophic unforeseen knock-on effects. In short, “Map and measure” before you start.
What’s the message?
Process innovation is a must for all businesses and can yield unharvested wealth. The key to this goes beyond just 5S, Kanban and others; and when combined with the Process Innovation Matrix a unique and comprehensive approach is provided that has been employed with great success in more than 20 countries.
Roger La Salle, www.innovationtraining.com.au