We couldn’t complete all of our projects in time to invoice the customers last month. If larger projects come in we don’t have the bandwidth to handle a big increase. We need to be able to say, “Bring it on!”
Thoughts of the day: Start with tracking and forecasting. Map out processes and look for inefficiencies. Build a stable of supporters. Identify shortcuts. Check on constraints backwards and forwards. Focus on the most profitable clients first. Gear up now so that your company can grow and profit as your sales and marketing programs kick in.
How well can you see the peaks and valleys so you can plan for them? Get sales into a routine of meeting weekly, with your operations people, to talk about what’s coming. Challenge sales to increase their accuracy at forecasting what’s coming in, when. If they need help with that ”“”“ get it for them. You’ll save money on the back end with fewer emergencies and last-minute requests.
Ask your operations staff to work with you on a process mapping exercise. Ask critical questions, such as, “Do I have everyone doing what they’re best at?” “Where does time get wasted?” “What are the hold ups?”
Assess the productivity level of your shop. What is its capacity when it’s going at full tilt. A production operation should generally run at 85 percent capacity, so that it has the ability to handle
breakdowns, retooling and interruptions. If your shop is above 85 percent capacity, start hiring and getting new equipment in. If you’re cash constrained, hire part timers at entry level and apply for government funds to train them. Ask equipment vendors to help with leases and other financing terms.
Look for products that are “interrupters” ”“”“ limited volume, big effort to switch in/switch out, lot of need to warehouse expensive inventory and not a lot of margin. Farm them out to another company to make under a private label agreement. Or, if you’re a service company, cut a deal with a sub contractor to provide the work under your brand.
There can be constraints to producing faster that don’t come directly from day-to-day operations. Whether it’s lack of the right material or inability to deliver, having a geared up operations force with nowhere to go can get frustrating. Make sure minimum stocking levels are correct. Approach suppliers with
long-order cycles and ask to work with them to shorten the timeline. Identify alternate delivery methods, so that nothing gets held up on the back end.
Think about where to go when the work does come in fast and furious. Plan for it ahead of time by building overflow resources. Interview and qualify contractors who have the right equipment, understand your level of quality and are willing to sign agreements that they won’t compete with your company and won’t steal your clients.
Consider asking other departments to pitch in when it gets busy. Ask overhead personnel to rotate into operations periodically. It’s good for them to understand what the company does to get products or services out the door. Put them into support positions where they can free up someone in operations to do more.
When you have to make choices about what work gets done first, go back to sales. Together, prioritize the most profitable clients with the greatest growth potential. Stop work on those with past due invoices until they pay up. First serve those clients who can best help you increase your company’s revenue and profits. Then work on the ones who work with you and pay a reasonable fee for what they need from you. Weed out the bottom 5 percent that are the least profitable, least appreciative and hardest to collect from.
Just because you’ve always done things the same way, doesn’t make it right. Whether it’s you or an outside firm doing the work for you, be open to changing and getting more efficient. Have someone in the company assigned to researching what are the latest innovations that your company could take advantage of.
Looking for a good book? “Practical goal Programming” by Dylan Jones and Mehrdad Tamiz.
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Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it to her via email at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit AskAndi.com for an entire library of Ask Andi articles.
