Increasing Operating Efficiency

Increasing Operational Efficiency

Our?Productivity Improvement Programme?is aimed at maximising business efficiency both in terms of productivity and throughput or lead times (Order to Cash). In our experience there is scope for performance improvement in most organisations. However, traditional methods of measuring this do not always identify the potential to increase productivity. By using Root Cause Analysis we can determine the real opportunities for performance improvement.

As a part of the programme we also run a?Lean Simulation Exercise?where participants actually manage a simulated three dimensional business to take if from Chaos to World Class. This is a very powerful business game as it is three dimensional and simulates real conditions.?

The two elements of?Efficiency?are?Output?and?Throughput.

Output - Productivity Review

Walking at a normal is equal to about 3 mph. Walking briskly is equal to 4 mph, a 33% increase. The International Labour Office defined a normal working performance to be 75 on a 0 to 100 scale, 100 being a Standard performance, the sort you would see in an incentivised working environment and 100 being an increase of 33% on a normal working performance. So the challenge is: can we improve productivity in our organisation by the same amount? We know about working SMART but we can also increase performance or productivity by increasing the pace of working and this means putting in the measures to achieve this.

Definition of productivity

Productivity is the ratio of output to input. For example, this could be expressed in terms of units per person/process, service value per headcount, sales per employee, etc.?We can measure this by department, activity or process as well as the whole company or division. From this we can build up a productivity picture of the company and determine the potential for improvement and where and how this can be achieved.??This includes proposals on what actions and changes need to be made. We will also advise on the timescale required to make the improvements as well as the resource requirements to implement the changes. In most cases we would expect the resources to come from within the organisation with input, mentoring and leadership from our consultant(s).?

Throughput - Order to Cash

By reducing lead times we can significantly improve cash flow. This can result in an initial injection of cash following improvements and an ongoing improved funds flow.?Our exercise would commence with process mapping of all functions. We would identity where there are delays in information and process flow. Companies that are function based tend to work in silos. This can cause severe delays in the process and impact upon delivery of the service to the customer thus affecting cash flow. In one recent exercise with a manufacturer of supermarket checkouts we established that lead times were typically 12 weeks from receipt of order to shipment. Through our Process Mapping we identified delays in the drawing office, purchasing and estimating due to queuing.

Through?Business Process Re-engineering?we would assist you develop a structure that eliminates departmental barriers and significantly improves flow of data and orders. Sometimes this means the merging of departments and functions. In the case of the supermarket checkout manufacturer we reduced throughput from 12 weeks to 8 weeks which immediately gave a cash injection equivalent to one month.