Production Capacity & Constraints
There is no point selling more if your business can’t also deliver on time, at the promised level of quality – that’s a sure way to lose customers. Conversely, it doesn’t make economic sense to have too much spare production capacity standing idle for extended periods.
Ideally your business should be forecasting sales, production, purchasing, inventories and related cashflows in an integrated way:
- Do your production and logistics teams always know what your sales team have contracted to deliver, when and where?
- Can your key suppliers keep pace if you ramp up production?
- Are you keeping too little or too much inventory on hand that may spoil – and has to be paid for, before your customers pay you?
You should also map potential “bottlenecks”:
- Do you know how much your factory can manufacture in a given period of time, after allowing for cleaning, repairs and maintenance?
- Do you have enough staff available to meet service deadlines?
- Do you have enough storage space for raw ingredients, or finished goods waiting to be shipped? Or space for trucks to load or unload?
Many businesses don’t invest at all in planning, assessing and managing key supplier relationships that could make or break their business.
- Does your business buy based on quality, price or relationships?
- How often do you run competitive tenders, or consider new market entrants who might actually be cheaper or better?
- Do you accept supplier legal terms without question, or negotiate them to manage potentially critical risks?
- How frequently do you meet with your key suppliers to solve problems and encourage innovation, and do you do that well?
Business Process Optimisation
Your business’s People and data should be organised to ensure that its Operations are fully efficient and effective… but few business owners and leaders invest enough time in that work. Once good processes can also become outdated quite quickly, as elements become obsolete, or better alternatives become possible in a rapidly changing world.
- How often are you reviewing your business processes to make sure they are still fit for purpose?
- Are you involving your key staff, who actually know what really happens on the shop floor?
- Do individual processes fit seamlessly together, across your teams?
Technology Systems & Risks
Many businesses rely on people doing key processes manually when that time might be better spent elsewhere, or use IT systems that are out of date, difficult to use, non-integrated… or all of the above. Again, many business owners and leaders don’t know how to choose IT systems that will suit their industry or business processes. Finally, many more businesses have been hacked, lost critical data or been subject to ransomware attacks than you might think.
- Does your business technology keep up with your Strategy and your processes?
- Does it help your People do their jobs well?
- Might your IT systems actually create risks?
In many services businesses, Premises costs are second only to People… and yet most business owners and leaders only review their Premises when leases are close to expiring, or when their business is struggling.
- How much space do you really need – for production, for storage, for your People, for common areas?
- How do you know whether your rent is fair, or how to negotiate fit out incentives or rent holidays?
- Might you be able to get better premises for less elsewhere – so much so, that it might be cost effective to break your current lease, or even to buy outright?
- How are you managing your premises? Do you do it yourself, even though you lack experience? Do you rely on an expensive agent?
- Are you fully conscious of your “make good” obligations?
Operational Performance Monitoring
There is no point setting your business’s Operations up for success and then walking away – as your strategic plans, markets and circumstances change, your Operations policies, processes and tools will inevitably become outmoded, and you will need to retest and adapt them.
It is also necessary to capture and assess tactical business data showing how well your business is doing against its operating plans, budgets and / or forecasts, and recommend that you review that key Operations data at least quarterly (and probably monthly or even weekly, where Production Capacity and Constraints are concerned).