Imagine a company that produces shock absorbers for heavy trucks.
One day, one of the product managers decides that they want, at all costs, to achieve operational efficiency in the process of manufacturing chrome shock absorbers.
After many studies, time and money employed, they begin to produce this piece with an effectiveness and operational efficiency the envy of any German or Japanese plant.
There’s just one problem: no one wants chrome shock absorbers on heavy trucks …
They do not need to shine, they have to be efficient in carrying loads and last a long time on our rather rough roads.
A phrase from Peter Drucker perfectly illustrates the mistake made by this product manager:
Want to achieve operational efficiency in your business without making mistakes like this?
Understand the method in 3 steps!
Achieving operational efficiency step by step
Efficiency at work can only be achieved through the efficient exchange of information in real time and a lot of teamwork, integration and collaboration.
Check out the 3 steps to achieve this!
Step 1 – Plan
Planning is divided into 2 stages:
- Understand what your customer wants
- Find out which processes in your business most contribute to meeting this customer desire
What does your client want?
In our example, it became clear that the product manager skipped this stage, with disastrous results …
It is critical to use collaborative systems to discover through the help of some key employees what customers really want, what their real needs are, and how to add value to your company’s products and services.
Salespeople who deal with clients on a daily basis can give you powerful insights regarding this. And using a process control system will also help a lot.
Which processes in your business generate more value for the customer?
The value chain is the business process sequence that culminates in the final delivery of a product or service to your customer
It is important to have operational efficiency in all of them.
But it is very difficult to control absolutely everything!
Define some more important processes to give more attention.
For example: services, customer services, delivery, and quality control can be key processes in your business.
But the cleaning of the facilities or the factory concierge do not directly affect the quality of the product. You can even outsource this type of process.
Step 2- Measure
There are 2 more steps:
- Define what to measure
- Stipulate goals
What do you need to measure?
It’s time to choose good performance indicators, the so-called KPIs.
These are measures that you must do in the process and that adequately reflect if the execution of the process will achieve the required quality and features that customers are looking for.
In the case of heavy trucks, you can measure by sampling if they resist a certain impact. You can also measure how many shock absorbers are produced per day to meet the demand, or whether you are wasting material.
A good KPI should be easy to measure, make sense to those who are evaluated by it when carrying out the process and have a direct impact on generating value for the customer.
What goals should we achieve?
Simply measuring performance without having a parameter to know if it is within the expected range, will not help at all.
Set goals, for example: produce 5,000 shock absorbers per month, or have less than 1% of shock absorbers produced outside the defined parameters.
You can use the SMART goals methodology.
Step 3 – Improve
Plus 2 more steps to achieve operational efficiency:
- Analyze the results
- Stipulate how to improve the process
How to analyze the results?
Study your KPI spreadsheets or other systems you use to track them and make sure goals are being met.
If they are not, proceed to the next step.
How to achieve operational efficiency in processes?
In fact, even if goals are being met, it is always interesting to try to make processes more and more efficient.
For this, look for opportunities for improvement, such as wastage that you can avoid, delays you can eliminate, or other problems.
Think of a new way to execute the process and train your employees to meet the new improved procedures.
Then measure it again, analyze it and improve it until you get the operational efficiency you want!