Competitiveness and performance are crucial for any organization. The quest for improving these factors is a never ending journey, and one of the key enablers is –the ability to do more with less. In this series of posts, I will share my experience about how to do more with less, in different parts of the organization, this fourth and last post tries to summarize the ideas and chart a path that might be a possible one to follow.
There may be many contributors that affect the results of the endless quest for enhancing performance and competitiveness. Some of these contributors may very well be out of the area of control of the company and depend on external factors. However, irrespective of these external factors and their influence (that clearly can be significant) there are always some factors that will have a major contribution to the company’s health no matter what.
These factors are: Productivity (and not necessarily cost), Operational performance measures that affect the customer’s business and … cost.
First and foremost productivity, your ability to exploit your systems capability has a major contribution to the health of your company. High productivity enables responding to the much more market demand with much less resources (or the same resources) thus contributes to cost efficiency and enables increase in revenues. Understanding every operational system is a flow system, applying flow management rules, converting the system to be demand driven and using global performance measure enables meaningful increase in productivity and at the same time improves other operational performance measures, such as; lead time reduction, on-time performance improvement and improved inventory turns. Resulting with your operational system doing much more with much less.
The second element is related to understanding how your operational performance affects the business performance of your customer (or sometimes of your customers’ customer) and using the improved operational performance to align your business proposals to the customer’s business needs. It is normally, not about the measure itself but its impact on the customer’s performance. For example, if you produce consumer goods and sell to distributors it is not about the on time performance, it is about the inventory turns of the distributor. If you can convert your operational performance so that is effectively turns the distributor’s inventory superior to your competition, you can sell much more with much less.
And, yes if you can do the above cost becomes a little less important. Still it does not mean cost should not be under control. However, controlling cost cannot be done effectively using as a consideration the additive rule (assuming that saving a Dollar in one place and another Dollar in another results with a total saving of 2 Dollars). Cost does not obey the additive rule. If you really want to make sure you are cost effective, cost needs to be considered realizing that all systems in your organization are interconnected, and the savings in one place can drive serious negative effects in other places. A good cost control system views the cost holistically thus ensuring that cost savings are real and enabling doing more with less.
At the end, taking appropriate actions can bring your company to be lean and mean, healthier and better capable and prepared to handle the external circumstances. And this means, that with a great infrastructure, even when the waters are stormy growth and performance can be sustained.
So, go ahead and do more with less, your benefits are beyond your expectations!