Remember the famous "Quickly, efficiently, inexpensively: choose two." The fulfillment of three mutually exclusive wishes was simultaneously considered impossible in principle. Now you need to get rid of this stereotype.
The operational efficiency strategy is aimed specifically at improving the quality of the product without loss of time and with minimal production costs. This is a departure from the rush and force majeure to the new state of companies, whose name has not yet been established. This is sometimes called “agility” in business, meaning speed, agility, and dexterity.
The operational efficiency of the enterprise is to improve the quality of the product while reducing costs. It’s not an easy task; to accomplish such ambitious tasks will require strategies and serious changes in the company.
But the game is worth the effort, because the main advantage of the best modern companies is the ability to quickly and adequately respond to external changes, while maintaining the optimal level of costs. The technology to achieve a high level of operational efficiency needs to be well understood.
Something went wrong. Everything went wrong
For several years, the company has been operating with a good profit and a stable market share. Nothing changes in the management system, because “the best is the enemy of the good,” and why, when corporate indicators go one-on-one with inflation charts and regional market statistics. Everything is good.
Well, not really. Because in this situation, alarming symptoms will necessarily appear:
- unnecessary procedures and regulatory actions that are outdated, but no one has eliminated them;
- duplication of work by different departments;
- lack of reliable current information on the state of resources, including financial;
- lack of plans to optimize costs and expenses;
- equipment of old models, outdated technologies;
- decrease in creative activity of employees: they simply have no time.
Such symptoms cannot lead to anything good. They do not lead.
Here is the result:
- staff swells, payroll grows catastrophically - pay article;
- no one controls costs;
- extra papers appear - documents of unnecessary reporting, unprofitable positions in reports, etc .;
- in warehouses - overstock, and in financial statements - freezing of money in stocks;
- the mood of the employees resembles the general depressive syndrome of the company, any motivation has stopped working, only the “from under the stick” method remains.
The diagnosis, as you see, is unimportant. The best modern treatment is to increase operational efficiency. We turn to the methods of its use, dosage and contraindications.
Concept, nuances and differences
What is the fundamental difference between the standard methods of increasing company efficiency and the project initiative “Operational Efficiency”?
There are never trifles in the operational unit of a company’s activities. A seemingly insignificant defect at the beginning or in the side branch of the process chain can lead to serious negative consequences. The elimination of such situations is usually very expensive from all points of view: psychological, financial, communication, etc.
For example, you begin to act in a traditional way and begin to solve the problem of overstocking in warehouses - to reduce the level of stocks of finished products. You are looking for a solution within the company. And in such a situation, there is a risk of receiving a negative side effect in the form of a conflict with manufacturers, to which you have made unrealistic demands to increase the speed of product release.
Unfortunately, the effect of trying to win in one area with the occurrence of losses in another is widespread: the strategy of improving individual indicators often leads to the introduction of another IT program, complicating business processes or to an elementary increase in costs.
The operational efficiency strategy implies a balanced approach to the search for internal reserves and their implementation. This is the integration of all types of activity in the company.
Operational business performance is by no means a strategy; it is very important to understand this. The strategy is developed with the definition of targets, ways to achieve them, the main vectors of development. Operational efficiency is inherently a tactical tool, it is the daily state of the company with stable performance in all positions.
Everything, immediately and quickly
The best ratio between costs and final results is the main condition for the implementation of the concept. Companies working in this format perform the same actions faster, better and with a minimum number of defects. It is this combination of properties that is a powerful competitive advantage in the market. Because to achieve high performance indicators of operational activities quickly does not work. This is worth a lot. To implement the concept, patience, determination, high communication skills, the program of operational effectiveness, and much more are needed. It’s impossible to “steal” these indicators - it’s impossible to use someone else’s. Therefore, operational efficiency has two more valuable properties - stability and durability.
Two in one: an integrated approach to strategy implementation
There is no clear classification of the main approaches to managing an organization in the economy. The fact that it should be systemic, no one doubts. But the choice of available management methods can cause certain difficulties. Which approach is most optimal in increasing operational activity: structural, functional, situational, process or project?
It seems that a hybrid solution is appropriate and logical: combine the two approaches. It's about the integration of design and process approaches. To harmonize them, it will be necessary to develop a structure of operational activities, create and implement processes using the unified execution of operational efficiency projects. All these actions are not new and redundant, they are needed in any case. Therefore, the choice of process and design approaches seems quite acceptable.
Development and implementation phases
- Optimization of business processes of the organization. If the process approach is not implemented in the company or is formally implemented, this situation will have to be changed. It will be necessary to calculate and build optimal chains of actions that will lead to improved results with minimal costs in the form of material and human resources. Employees responsible for the process “philosophy” in the company should be specially appointed with a clear description of functional responsibilities. Direct submission should be very high - best of all is the leader or first deputy leader.
- The most important and very promising component is the rational use of human resources. This principle is in no way limited to a coherent organizational structure with well-defined functional responsibilities of each employee. We are talking about new recruiting technologies, talent management, new formats of training and development of employees. In other words, the optimization of human resources implies, above all, the high quality of these resources. These are competent and educated staff.
- “Resource” principle - respect for resources. Now they often use the expression "lean manufacturing", which does not look very professional. The fact is that the Japanese system of "lean manufacturing" includes quite specific and stringent requirements, which many are unaware of. One way or another, the effectiveness of the operating system includes a “resource” question. You need to remember an important point: “respect” does not mean saving money, but the optimal spending of resources of all kinds.
- Monitoring changes of any nature - internal and external. It is not as simple as it might seem at first glance. Information about competitors, new technologies, changes in legislation, disputes between department heads, accidents at distant warehouses - everything should be processed and transmitted through waste channels. The information component should be well written in a special business process.
- Control and accounting system. A competent stream of reporting in compliance with the rules of the classic bureaucracy. The concept of bureaucracy is unfairly discredited, it means the correct workflow: "the minimum necessary for the right people." The process approach, as well as other changes, should be documented for one reason: to track the results and changes in key performance indicators of operating activities.
Tasks for Russian companies
Against the background of tight market regulation, more sophisticated consumers, a slowdown in GDP growth and many other events that do not facilitate the growth of companies, a circle of tasks needs to be clearly outlined. They can even be called military, and their urgent implementation - front-line activities. You can do without jokes, but the specifics should be iron:
- Ensuring transparency of relations with partners, optimizing costs, increasing coverage, updated marketing strategy.
- Building strategic alliances with key partners of a new type: with integration and changing contractual terms.
- Unconditional high quality service: this is the only way to keep customers and have a competitive advantage.
- Development and implementation of new sales standards directly and through intermediaries.
Russian companies have every opportunity to improve business functions and increase operational efficiency. The strategy should include at least four areas:
- increase in labor productivity;
- personnel management efficiency;
- rational disposal of capital;
- productive customer relationships.
Performance management
Of course, this is the business of the first leader. Among the tools for monitoring the implementation of tasks is the balanced scorecard, which copes well with the analysis and calculation of operational efficiency.
Three directions must be kept in focus:
- Creation and support of a coherent and stable operating system.
- Formation of a new organizational structure.
- Integration of corporate culture and staff involvement in all improvement activities.
When planning any effective action, you need to ask yourself four questions:
- How to optimize the conditions and necessary resources for the implementation of this action?
- What personnel should be involved? How will people be in contact?
- What is their motivation and what needs to be done to increase it?
- Are people competent enough, or do they need to be trained?
All types of operations and activities perfectly fit into the blocks of business processes. If they are not there, they will need to be described in order to then optimize according to all the rules of modern science of enterprise management. The process approach is fundamentally different from the functional one, and above all, by its capabilities to quickly change and concentrate on the final result.
If in the traditional functional approach the company is a set of departments, then in the process it is a set of operations in the form of processes. The main working unit of the whole improvement strategy will be the operation - the main building block of success.
People
Now it is called the fashionable Eicharovsky term “personnel involvement”, which in fact is an essential component of success. It is important not to replace this involvement with numerous internal employee surveys, as often, unfortunately, happens. A survey is a great tool that you will definitely need as you complete all the work. But before conducting the survey, you need to work hard so that absolutely every employee understands where and why the whole company as a whole and its division in particular are moving. And the most important will be an understanding of his own role in this movement. This motivation has never failed anyone, it is worth a lot.
In addition to a deep understanding by employees of all the changes in the company, it is necessary to tackle the most serious way in introducing the KPI system of key indicators. After all, if you look, the classic key indicators are also indicators of operational effectiveness.
Results: success is needed today
Most likely, companies already today need to reconsider their views on improvement technologies: they cannot avoid project activities to improve processes and operations. A few years ago, competitive advantages were formed due to focal improvements in any one direction - for example, reducing production costs or revising the customer loyalty program. The effects of the changes most often did not occur immediately, but within a few months or even years.
Today, this pace is unacceptable. The situation is changing with cosmic speed on all fronts; the “success today” installation now works. But it's not just about speed. Having achieved an increase in production quality indicators against the background of cost optimization, dwell on this - like death. Already in the second or third cycles of the process, one must begin to seek to increase profits. Do not wait for negative symptoms to launch a new project to eliminate them - this approach no longer works.
Today there are no and cannot be any corporate secrets or secrets related to specific advantages. Successful developments and temporary advantages of any one direction in the company’s activity are values ​​with very doubtful value.
Retention of competitive advantages will be possible not with specific products or areas of activity, but with the company's ability to adapt quickly and effectively. The ability to change immediately in all areas - human resources, inventory management, document management, product line, key customers, risk management, etc. - this is what should be the management of operational efficiency in the form of a permanent status of the company.
Instead of a conclusion: a healthy lifestyle
The operational efficiency of an enterprise is a continuous and continuous process that should never stop. This format of work should become a "healthy lifestyle" of the company - a way of being. Speaking of metaphors, there is no need to go on a rigid diet in order to urgently lose weight by the summer. Or knock down the jumped blood pressure with potent pills.
To inform employees on Monday morning: “From today we will be more effective” is not an option, experienced managers understand this well. Involving everyone, explaining them as much as possible and providing them with the necessary tools is the task of the first leaders so that people reach for him.
No fires or force majeure. To be in good shape all the time, to track any changes around, to find beautiful and smart solutions, to act pro-actively ... Only in this way. There is no other way.