Is your business productive?

Is your business productive?

According to the Office of National Statistics British productivity is low. Everyone else seems to have better productivity than the UK. What is productivity like in your business? Does your business mirror the rest of the country? Just how productive is your business?

Do you know how productive your business is?

You can’t answer that question until you start collecting some numbers. Don’t worry, this isn’t as difficult as it sounds. You already have the numbers. You might need to ask a few of your managers to get them for you, but they are there. And this is worth doing. If you don’t know how productive your business is now, then how can you improve it?

When you have the information, you can make the right decisions for your business.

What should you measure?

It depends what your business does. Whatever your product or service, productivity is a fairly easy equation. At its simplest it is:
Productivity =   Total units of outputs

———————————

Total units of inputs

 

OK? Good. Let’s walk through that.

Let’s say your business designs and makes widgets. First you need to put numbers against the inputs. They will be things like:

  • Raw materials
  • Machinery to make widgets.
  • The cost of having a building to store materials and make widgets.
  • The cost of running that building.
  • People to make the widgets.
  • Delivery drivers and trucks to deliver them to customers

 

There is probably more you can include in that list but you get the picture.

 

Your finance people already have every single one of those numbers. It won’t take them long to put the numbers together for you.

 

Then you have your outputs, your widgets. Let’s say you are currently making three different types. It could be useful to have your inputs separated out for each type. There is no guarantee that the productivity measures are the same for each type of widget. So let’s take the outputs for one line of widgets.

The Really Useful Widget line output is also a number. How many come off the production line in a given period. It could be a day or a week, or any other time period. Let’s work with a week.  Someone has those numbers, too.

 

Productivity =                            Really Useful Widget outputs                     = 10,000

————————————–                ——–                                          = 10

Really Useful Widget inputs                         1000

 

Of course these are made up numbers and I’ve picked easy ones just to show you how it can work.

Now you have a baseline for this line of widgets and you can monitor it. You can also compare it to your other widget lines. Then, when something changes you can look at why. One week your Really Useful Widget productivity number is 8. Another week it’s 11. Once you have that number you can ask the critical question of ‘why?’

How do I know I’m measuring the right things?

This is your business so it’s up to you what you measure. There is some good evidence that getting your teams involved in picking the numbers helps to make sure you measure the right things. It’s also a clever thing to do because it involves people in something that they do every day. It will give your teams a sense of ownership. Once your widget production teams start watching the numbers you can bet they will want to know why it is changing and what they can do to improve it.

Why am I doing this?

Those numbers are going to help you achieve growth. There’s an old saying about standing still not being an option. You can grow your business or you can watch your competitors grow theirs. Growing your business is going to be a lot easier when you know how productive you are to start with.

How do I improve the productivity?

OK you have your numbers. Now you need to track them for a while. That might be a week, a month, a year. It will depend on your business your customers. Only you know how quickly things change or how long it takes for orders to become paid invoices. So monitor those numbers.

Learn to ask why

There is a real temptation to jump in with ideas. Wait. First ask why things are the way they are.

Have you ever had someone tell you how to do your job? It’s annoying isn’t it? So don’t do that to other people. Look at the numbers and ask why. Why do we do it that way? Why does it take that long? Why do we have this here and that there?

The people who make the widgets generally know all the answers to the questions you’re asking so just ask them. Those people are often the ones who know what slows things down and how they can be speeded up. Learn to ask not only ‘why?’ but ‘what would you do?’ You will get ideas you might not otherwise get and they will be based on how things really work. Remember, people come to work to do a good job. If you give them a chance to do it better, then they usually will.

What is the issue?

We often presume that the best way to improve productivity is to do something about the people who work for us. That might be right but it is often wrong.

A call centre working on seasonal trends suddenly found itself with more call volume than it could handle, out of season. Calls were missed, callers complained about the wait times. There were not enough call operators on duty and it was difficult to get more in immediately.

In the aftermath, one of the managers wanted the call handlers to have more training to deal with calls. That was never going to help. The call handlers did a brilliant job. The problem was, they had more than twice the volume of calls they could handle with no warning at all. Why? There was a piece on national TV which gave their number and recommended ordering early. No one knew it was happening and there was no easy way to manage the unexpected.

In a food factory, a new line was running well. Then overnight, production fell to half. Shift workers stood idle, not knowing how long the line would be down. This went on for weeks. The line would stop and start and no one could predict how long it would run before breaking down. Why? The works manager decided to cut costs by changing one of the inputs. It was significantly cheaper but it jammed in the machines.

Make evidence based decisions.

So you have your numbers. You monitor them. You ask ‘why?’ all the time. Your teams are watching the numbers. They know you are interested and listen to them. They start volunteering ideas and trying things out. You let them because well, it’s great when they bring their brains to work. Now what?

Now you make some decisions. Do you run your call centre with the number of people you really need or do you have a bit of slack in the system? Do you go back to using the original, more expensive packaging that runs smoothly, or do you continue with the cheaper one that jams.  The right decision in both these cases is going to be based on the numbers. Run the numbers and see what they say.

It’s better to have people standing around idle for part of the shift because even with the downtime, the profit margin with the new packaging is fantastic? Then do it. Meanwhile, ask the shift what they can usefully do while they are waiting. You don’t want good people to get so bored they leave.

It isn’t cost effective to have extra call handlers when you don’t need them? Great. Don’t worry about the complaints then. Oh maybe you should. Your marketing manager says the damage to your reputation is causing a problem and may lose you customers.

When you make the decision about how to change or improve your productivity, it pays to take all the evidence into account. Your numbers and costs are important but so is your reputation, keeping your team together and keeping them motivated. Take a broad look at the business evidence so that when you make your decisions, you get it right for business growth.

It’s about growing your business, not watching your competition grow theirs.

 

Posted by admin-howat

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