Jay Milligan, President and CEO, CCi. Jay has over 30 years of operational leadership experience across various business sectors.
It looks as if economic uncertainty and business disruption are here to stay. The United Nations Department of Economic and Social Affairs notes in its mid-2023 “World Economic Situation and Prospects” report that the current global economic situation remains highly uncertain due to an “extraordinary confluence of recent shocks,” coupled with banking sector turmoil and persistent inflation in many countries.
In most industries, operational performance is measured by KPI targets. In the manufacturing industry, for example, typical KPIs include metrics like production throughput, cycle time, equipment effectiveness, demand forecasting, inventory turns, changeover time and first-pass yield.
If these metrics are slipping, operations leaders have to act fast to remain competitive by identifying high-impact opportunities for performance improvement within their organization. By concentrating their efforts on rapidly capturing the required efficiencies and KPI uplift, they can rapidly drive positive change.
Where To Start
Improvement projects usually start with recognizing that your business is not performing well or could perform better. However, many organizations don’t know where to start when identifying the root cause of the issue, which means they can’t accurately “size the prize” (potential KPI uplift) or prioritize their focused improvement efforts.
To address this issue, I would recommend conducting a loss and waste analysis, a lean process for analyzing the key performance areas delivering competitiveness in the value chain, and then quantifying and prioritizing the scale of improvement opportunities.
It’s important to note that although the loss and waste approach originated in the manufacturing sector, it can be applied in any industry to identify major losses within the business—such as excessive operational costs or lost production time—and find possible improvement areas.
Identify The Short-Term Opportunity Capture
Once the appropriate level of detail has been gathered from the loss and waste analysis, each prioritized loss must be quantified financially and verified by your operations and finance teams.
You should also consider bringing in external experts at this stage. I’ve found that many organizations need outside, objective and practical support to provide an unbiased perspective and help them shift out of their comfort zone and kick-start their business transformation journey.
Once you’ve built your team of experts, I recommend that you guide them to look for the following key characteristics of a worthy short-term ROI opportunity:
1. Low initial investment required. By focusing on opportunities that require a low upfront capital investment you can minimize risk and get faster returns. Examples of opportunities that require a low initial investment include optimizing inventory management or improving employee training and development.
2. High ROI potential. When weighing up improvement opportunities it’s essential to ask, “Where can we achieve the biggest ROI gain by applying focus and resources?” Conduct a thorough assessment of the potential impact of the opportunity on metrics such as production costs, sales revenue and product quality to guide your decision-making process.
3. Short time frame. Looking for projects that can be implemented quickly will enable faster results and allow you to adjust your strategy sooner so you can make further improvements if targets aren’t being met.
4. Scalability. Find a solution that can easily be replicated across other areas of the business. To achieve maximum ROI, start with a small initial investment, as mentioned above, and then gradually expand the initiative when you start seeing results.
5. Sustainability. Don’t just look for quick fixes, choose projects that can be sustained in the long term through best-practice implementation. This is key to ensuring ongoing sustainable improvement and establishing a true competitive advantage.
Once high-impact opportunities have been identified and management buy-in secured, set up your performance improvement projects and bring in the right people with the right skill sets to execute your strategy.
Sometimes it’s just not practical to hire all the necessary resources internally, and you must look outside for resources with proven experience across multiple successful projects to help achieve the necessary results.
However, I have found that it is also best to continue investing in your people through upskilling, leadership development, coaching and the celebration of incremental wins to inspire a culture of continuous improvement. This is vital not only to obtain the desired near-term performance acceleration and ROI capture but also to ensure ongoing sustainable improvement.
Rapid ROI manufacturers are facing a triple squeeze as global supply chain constraints, inflation and talent shortages are putting the industry under immense pressure. As a result, operational excellence leaders are pulled between short-term recessionary alleviation and longer-term growth strategies. But what if you could do both? By identifying and capitalizing on high-impact improvement opportunities, I believe that you can achieve rapid ROI and remain competitive.
The key is identifying the improvement opportunities that will have maximum impact, addressing them through structured improvement projects, enabling employees to own and drive the initiative and sustaining the gains through continued best practice implementation.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
