Many business owners and managers are frustrated by the poor results achieved by some portion of their business. They diligently track their business using metrics like sales, profits, customer perceived quality, on time delivery, etc. These are obviously some of the most important results any business needs to produce. Why doesn’t attention to these important metrics produce better results?
Unfortunately none of these metrics are actionable nor controllable as objects of management focus. No amount of teeth gnashing about inadequate sales will generate a single additional sale. No matter how intensely you beat on your operations to improve on time delivery will this lead to improvement.
Why is this so?
Let’s examine on time delivery as an example of the problem. On time delivery is an end result of a process, a series of ordered steps, activities, that are your production operation. This process may not be delivering adequate on time delivery to your customers. But, you cannot understand what is causing this process to be out of control without examining in detail, through what is commonly referred to as root cause analysis, the causes of this failure. Here is a brief list of some of the more common causes:
- Part shortages
- Machine down time for poor maintenance
- Production bottlenecks
- Poor part quality
- Lack of labor
- Poorly trained labor
- Poor scheduling
- Inadequate customer requirements specifications
The lesson here is that in order to improve on time delivery you really need to first determine the cause, second set improvement tasks that eliminate the cause, and third measure improvements in that function until you achieve a controlled state of adequate
performance for on time delivery.
The fundamental mind set is to see your business as a system of processes. Your task is to make sure the processes are well defined and operate in a controlled state to produce the desired results. The method for achieving in control processes is to determine the root causes of failure, set tasks to eliminate the cause, and track metrics that measure the reduction of the causative element.
Now you might be in a service business and say to yourself, “My business does not produce widgets. How can this apply to me?”
Services are also produced through a series steps. In many cases these steps are not well-defined and are further complicated by the frequent direct interface with, and frequently the participation of, the customer. It is not as easy to “see” the steps in services production as in widget production. You don’t have the machines and parts moving around with a sequence of physical transformations.
Here is a list of typical causes of poor service quality:
- Bad service design
- Mis-managed customer expectations
- Inadequate information resources in the hands of the frontline service provider
- Poor training of the service provider
- Unclear decision making scope and authority for the service provider
Learn to see your business from a process perspective. Then, apply process control techniques to drive to better results in sales, profits, customer retention, and whatever else is important.