Column: How to improve operations

Q: “I”™m not yet getting the results that I want from operations. I get the sense that we”™re coping, not managing ”“ it”™s not what I”™m looking for. How do I help my people to get out in front of what we”™re doing day-to-day?”

Thoughts of the day: How clear is your understanding of what your customers want? How quickly can your suppliers, production and delivery change gears if customers change their wants? Much of the flexibility of a plant depends upon the quality of information and tools available to it ”“ goals, measuring systems, compensation programs, training, ability to support the reworking of processes and retooling of equipment.

Often the answers to operations problems come from somewhere other than operations. Getting ahead of a problem in operations means your people learn how to anticipate needs. Figuring out where the problem comes from will help with getting ahead of the curve on solving problems more quickly or even solving them before they appear.

A big part of success in operations comes down to communication and information flow. Make it someone”™s job in operations to be responsible for reaching out to other areas of the company for information. Take a critical look at how well the communication connections work among sales, marketing, finance, human resources and operations.

The operations function in any company exists in order to produce whatever the customer has contracted to purchase. Typically, sales is the department most likely to be in close touch with customers regarding existing and potential orders. Marketing is often the department that does research and has information about what customers and prospects are likely to want ”“ and not want ”“ in the future. Looking critically at information from both marketing and sales can help operations anticipate changes.

Finance can help operations by providing budget and expense information. Here are some of the questions that finance can provide answers to. What is the average cost to produce? What price changes are likely to impact production costs? How profitable is the overall operation and what suggestions are there to reduce overall cost of goods sold? Is timing an issue in operations? Are goods going out in sufficient time to reach the customer without having to incur rush fees? What”™s the waste rate ”“ for goods produced and not sold, as well as for materials not used? What equipment and training will be needed to meet future sales?

Human resources is the source of trained labor. Identify the person(s) responsible for hiring, evaluations and training. Ask HR to contribute recommendations on what can be done to improve performance by the people working in operations. Tie together recommendations coming from marketing about what customers are turning to. Build a plan for training based on what operations people need to be prepared to produce in the future.

The other side of the operations puzzle is getting supplies in time to produce what the customer wants. Again, it comes down to communication. Ask marketing to project needs for new products, sales to estimate the timeline to sell, finance to source and negotiate with vendors, and HR to evaluate existing vs. future skills.

Effectively managing the quality of operations requires coordination across all departments. When it comes to setting and meeting goals, operations has to be aligned with marketing, sales, finance and HR. Accurately executing according to agreed upon goals will free up time in operations, by allowing a shift from fixing problems to anticipating and planning for future needs.

Make sure that the operations function is not too tightly planned out. Scheduling the factory at 100 percent productivity doesn”™t work. There will always be problems that have to be worked out. Equipment needs to be re-tooled. People need to be trained. Discussion of goals and options is essential. Allowing extra time in the schedule to work through challenges means there”™s time to recover when things do go wrong and room in the schedule to plan ways to improve.

Looking for a good book? Try “Operations Rules: Delivering Customer Value through Flexible Operations” by David Simchi-Levi.

Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping small to mid-size, privately held businesses achieve doubled revenues and tripled profits in repetitive growth cycles. Interested in learning how Strategy Leaders can help your business? Call now for a free consultation and diagnostic process: (877) 238-3535. Do you have a question for Andi? Email her at AskAndi@StrategyLeaders.com. Visit AskAndi.com for an entire library of her articles.