Looking for a business transformation? How to reach the next level of performance? Use custom built software.

Over the past 10 years I have been involved in business performance and operations management in manufacturing – chasing customer satisfaction through quality and delivery, and winning work at the right price in a competitive market. I have worked with many lean manufacturing tools and used many initiatives to create change and improvements in the workplace and tried to achieve those elusive business results that allows us to say ‘we are winning!’ I have seen the successes and retreats in these activities, the denial, the reluctance and the acceptance. Overall there is always progress and improvement, laying the foundations, creating change one day, one week, one month at a time, but it can be a hard and long slog for some companies. 

Then I built some custom software and watched the biggest transformation in the business I have ever known. It was clear that the software was helping the company to smash through the glass ceiling of performance that had limited its performance in the past.

It wasn’t completely down to the software - there is of course a lot of communication, leadership and guidance required to achieve such change. The right combination of people, process and data (technology) can achieve great things and this article is about that transformation and is written from my perspective in a relatively hard end of manufacturing. The software was a key and with the experience gained so far, the power to unlock more business performance (i.e. profit margins) is obvious once you accept the reality of the digital age and understand how to use it.

Before I continue I want to express my general opinion that manufacturers and small companies are still not really in tune with the digital transformation that is taking place. It touches virtually everyone one of us now – ordering your food online, managing your bank, booking travel, hotels, cinemas, taxis, etc. When we go to the office, many of us sit down with some clunky old software that is difficult to use, doesn’t tell us exactly what we want and doesn’t really reflect how we work.

The Results
All businesses are different and therefore success in your sector or company is particular for that case. In my case the results were typical of a manufacturing company – the top 3 of quality, cost and delivery performance followed by gross profit and net profit. The implementation of software based transformation strategy, created staggering improvements in every area of the company. The improvements became our selling point and a strategic weapon to create growth from existing, new and old clients.

There are a lot of things that have to come together to create software-based transformation and the title is perhaps a little misleading, as just making a custom built software application is not enough. It must be good software for a start, but it also has to break down some barriers and be an enabler of change. To do this, you have to have a really good understanding of your people, your processes and what data is needed when and where. New software should not be about can it do everything our current system does? Or how does it do things that we are comfortable and familiar with?. New software should be about creating a game changer. 

I think it’s also worth nothing that IT budgets are typically minor afterthoughts after everything else. To be successful at this you have to allow a modest budget for software development but realise that it is the backbone of your company and it is there to support efficient use of ALL company resources. It is critical in this day and age to invest in digital technologies almost regardless of your business if you want to keep up with, let alone lead the pack. It might mean a staggering 100% jump in your IT budget which was already small, but delivering a 10% change across the entire company affecting major budgets like manpower and materials will have dramatic effects on the bottom line.

Creating a Game Changer – people, process and data.
To create the effect I have seen, there are three things that must be well understood in order to define your software design that has the capability to be a game changer. 

People - how do they add value to the company and what is it that they do that creates value? People are most likely to be one of the biggest budgets in most companies and their productivity and engagement with the business is essential for success. Everyone has some amount of work that doesn’t add value – maybe creating management reports, attending meetings about performance and dealing with troubleshooting and fire fighting. If your business is not very healthy then these last two could just sound like your entire working week and this is a waste of talent and resources.

Process – everything in a business can be detailed into a process map and it should be on several levels. Starting at the top, large generic process maps for sales, production, distribution etc. Then breaking down in to each department some more detail and so on one until you reach single tasks of individuals. Process interactions are often sources of trouble between internal departments. Handovers, communication and politics are all ready to interfere with the value added processes of the business and drag performance down.

Data – all processes have inputs and outputs and in manufacturing businesses this is normally quite specific data. However if you use your process maps to define where you want to measure KPIs you can start to consider dashboards, exception management and then process monitoring and process handover can be built into the design of the software. Integration of data across the business reduces administration and speeds up everyone’s day and maybe even lift moral as people spend less time with mundane administration and more time doing what they joined the company to do. Data reviews also require some imagination, you need to be able to think outside the box and ask questions like “what if we could do X?” or “what if we collected data Y?” or “could we create an automatic relationship between process A and B”?

There is one more key element to consider and that is your customer. Your customer has to be at the centre of the entire process and you have to consider how do you add value to your customer and how well do you meet their needs? What could be changed to improve their experience of dealing with your company? or exceed their expectations to allow you to up-sell, cross-sell, or just win more orders. What are the USPs that your sales team want to go out into the market with to win business.

It’s a Journey
Developing a software based transformation sounds like a project that has a specific goal and end date. The biggest gains can be realised at the beginning of a transformation when the big wins can be achieved and there is a sense of “its done”. However in the process you learn so much about the business and new opportunities will present themselves that’s its natural to consider extending the scope of the platform to bring in new areas and new functionality to enable better integration, higher efficiency and ease of use. This is where selection of the technologies and development team/company is critical. It should be thought of as a long term strategic decision to invest in custom built software, it’s a different world to off the shelf software so don’t treat it like it’s an off the shelf product with a fixed cost. If a true transformation is achieved you have a good chance to earn the title of best in class or industry leading.