Tag Archive: business growth

Remember to Keep an Eye on Costs with Growth

July 9th, 2015
cost with growth

Navigating growth gets tricky if you lose perspective on spending. Keep costs under control by identifying the spot where people, process and technology work best.

Understanding and controlling costs has always been a critical success factor for the majority of businesses; however, during times of growth, it is especially important to make sure to remain vigilant while also investing as needed.  Growth is exciting but it also can be harder than downsizing to navigate. Thus, keeping an eye on costs can be valuable to ensuring success.

So, how does one go about defining cost? It is as simple as defining the intersection and sweet spot of your organization’s people, process and technology assets. It doesn’t require complex solutions or significant capital investment; instead, it requires a focus on these three key variables – people, process and technology.

First, it all begins with people. As my HR mentor used to say, the right people are your #1 asset. And, I’ve never seen an example where this didn’t turn out to be valid. From the perspective of defining and controlling costs, there are a few keys to success related to the people component:

  1. Explain the big picture– Since defining and controlling costs involves hard work, a strict process discipline and doesn’t typically involve a new and exciting technology or the latest fad or program, it is not likely to win popularity contests. In my experience, most people want to be working on something considered interesting or leading edge; therefore, it is essential that leadership not only present the big picture vision behind this initiative including the why’s to the company goals but they also must emphasize the importance and priority. The talent will be far more focused on delivering results if they understand how they are contributing to the company’s success – and they know that their efforts are valued. When I was VP of Operations, I found it amazing how many times I received feedback about how this seemingly small communication step was not only appreciated but also a key reason for people feeling a part of something important.
  2. An accountability culture– Since controlling costs requires a rigorous process discipline combined with metric tracking, a culture of accountability is essential. This sounds far easier to achieve than it is in practice, yet, in my experience, it is the 80/20 of delivering results. So, it is worth it to invest the efforts upfront to achieve a significant return on investment. The keys steps involved in creating a culture of accountability include: jointly establishing performance goals, providing/seeking continual feedback and improvement, tracking progress to goals, revising based on changing business priorities, following up with an audit and acknowledgement of completion/success. I found that people resist at first as a culture of accountability is uncommon and uncomfortable (after all, being busy feels good and is easier to control than being accountable for results); however, when consistently applied, 80% of the people step up to the plate, the low performers leave (which further energizes the high achievers) and, in the end, the majority of people find more meaning in this culture and can no longer imagine going back.
  3. Value your people– As obvious as it sounds, people are cornerstone to achieving a successful end result. People are not only the thinking power of the organization but they also drive the bottom line results. With the clarity of goals and framework, people will rise to the occasion and contribute to success through involvement and participation. The key is for leadership to get out of the way of success; instead, if they provide support and tools, ask questions and encourage continual progress, you will accelerate your timeline to success.
  4. Cross-functional team– 80% of the time, a cross-functional team will not only accelerate the results but will also improve the quality of the results. For example, in one project, our goal was to define material usage and find a way to reduce back to standard levels. There were at least 10 possible scenarios of why material usage was higher than standard, ranging from high scrap levels to adding extra material during the process in order to speed up the run rate on the machine (which produced 5-10% additional parts) to receiving materials that weighed on the high side of tolerance. By including team members from Engineering, Operations, Maintenance, Quality, and Finance in the process, we were able to reduce the time required to identify and solve the problem.

In addition to prioritizing people, it is imperative to focus on process and technology. In the case of defining and controlling costs, the keys to success are interrelated and largely interdependent for process and technology. They include the following:

  1. Simplicity– I thought we’d start with this key to success because it is fundamental and often the lack of simplicity is a root cause of poor results. There is an intense pressure throughout organizations to add complexity – it is quite enticing, and most companies think it is essential to success so they create a never-ending web of complexity to supposedly provide them with “the latest and greatest” analytic tools (which few, if anyone, truly understands) and ways of tracking cost. For example, in multiple projects, I’ve worked with teams who thought that tracking material issued to the line, specific piece by specific piece or specific unit by specific unit was absolutely critical to understanding scrap per line crew, per supplier, etc. In each of these cases, there was some benefit to tracking this data; however, it was the 20% of the 80/20 rule. There was a cost associated with the extra level of detail tracked. And the data was only as good as the data going into the process (garbage in, garbage out). Therefore, aside from an industry or manufacturing processes that requires this level of complexity, you’ll achieve exponentially better results with simplicity, just as we did in our projects. Actually, in one case, we invested extra resources and time in order to reverse the complexity and simplify the process, yielding an improved bottom line result. In another example, instead of investing in the latest and greatest software, we invested significantly less to develop reporting that separated the purchase price variance from the usage/volume variance. This report unscrambled the complexity. We then leveraged this information and focused exclusively on the controllable factors that could be modified or managed in order to have a direct impact on results. Why waste time with anything else? I’ve found repeatedly that the simplest, straight-forward, typically ‘boring’ solution yields the best results for less cost.
  2. Data integrity– Data integrity is one of the “simple” solutions which typically provides the most significant return on your investment in these types of projects. I equate a focus on data integrity to ensuring that your house’s foundation is stable. Although widely popular, why do you want to spend significant resources, time and funds to implement complex systems (similar to installing just the right home theatre surround sound system) when you have a huge crack in the foundation of your house? It sounds ridiculous but it is common – my guess is that it is more exciting and interesting to talk with your friends and neighbors about your new surround sound system with the latest features instead of dealing with the builder to fix the boring yet structural problem in the foundation.
  3. Analysis, prioritization, and follow-up– in essence, process discipline. I consider this blocking and tackling – hard work yet essential to success. Typically there are endless opportunities to define and control costs. This is exactly why timely analysis and prioritization are key components in every successful cost initiative – no company can afford to staff every potential opportunity; instead, staff and prioritize those with the most potential impact to the bottom line or those affecting the critical product lines or key customers. Don’t get stuck in analysis paralysis; instead take your best shot at prioritizing and then focus your efforts solely on execution. During execution, it is critical to track progress, identify root causes, resolve problems, test, re-test, follow-up – and repeat the process. On one project team, for every 1% reduction in line scrap, we would save one million dollars. We didn’t find the “million dollar solution”. Instead, we saved a few million dollars by identifying a series of anomalies, analyzing root causes and developing solutions with the cross-functional team. No fancy systems, no complexity, no significant capital investment. Instead the cross-functional team developed simple reports/metrics, analyzed, brainstormed, and instilled a rigorous process discipline – essentially worked hard and found a way to deliver more than a million dollars to the bottom line.
  4. Continuous improvement– Defining and controlling costs is not an event or project; instead, it is a process (a way of doing business). There are never-ending tweaks to the people, process and technology to optimize operational processes – thereby reducing cost. In the best organizations, optimizing the tradeoffs of line efficiency, line scrap and staffing levels is built into the daily routine. For example, in an operational turnaround project which resulted in a 20% gain in efficiencies, the key to success was focus. Each morning in the operations meeting, a cross-functional team met to review the prior day’s key performance indicators (such as efficiencies, downtime, scrap levels, etc.), set today’s priorities and develop simple action plans with associated resources to address. In a manufacturing environment, there is always an opportunity for improvement. Resolving the “low hanging fruit” opportunities alone doesn’t propel an operation forward; it is the day-to-day discipline of tackling problems and identifying opportunities that achieves the result. In essence, a rigorous process discipline focused on continuous improvement was the key to delivering a successful operational turnaround.

Defining and controlling costs is not about the people, the process or the technology; instead, it is about leveraging the right combination of people, process and technology to catapult your organization to the next level. 

Continue reading on how to strengthen your Eagle Eye:

Business Process ROI

Leverage Systems for Growth

 



Business Success: Thanks to My LMA Advocate Awardees

June 22nd, 2015
business success LMA Advocates

People are cornerstone to business success. LMA Advocates are acknowledged for their contributions to LMA Consulting Group on its 10th year of business.

As my initial newsletter subscribers know, Profit through People has been my focus since day one! After 10 years of consulting, following 15 years in organizational life, it is apparent that PEOPLE are our #1 asset. Those leaders who leverage, engage and empower people thrive.
People are cornerstone to business success. Apparently this shines through with everything I do and write. In 2013, it was time to give LMA a face-lift, and so we labored for days to develop logo options. I sent them to you for feedback and was thrilled with the vast # and specificity of responses; however, there was no clear “winner”. Less than an hour later, I received an email from my webmaster. He had read my email (since he typically posts my newsletters), and he thought the people element wasn’t emphasized enough (as he obviously had been paying attention!). He not only gave me that feedback but sent the perfect logo attached in the email. I promptly received rave reviews from you – the clear “winner”. Thanks Scott!

Clearly, this story indicates that my success is no different. I have FAR too many people who have supported me along the way (starting with my parents and a long list from there) to name them all. Therefore, boiling the list down to the 10 who had the largest effect on my business’ growth and success was extremely difficult. I appreciate the contributions of so many, and I will be in touch with each of you…..

Next, on to the 10 people I recognized as LMA Advocates at my 10 year celebration…….

(In alphabetical order)

  1. Andrea Belz: Andrea and I were accountability partners for several years during a crucial period of my business growth and transition. I’d send her a case study, bio or article, and she’d slash it in half while improving it! Andrea is also the person who introduced me to ProVisors (a group of trusted advisors to executives and business owners).
  2. Mike Brown: Mike is the reason I was able to start my consulting practice. He gave me the opportunity to be the VP of Product Supply for PaperPak and fought off Board members and the like who might have preferred a grey-haired man from Harvard running their operations; instead, he stayed true to his focus on values and results. He has also been very supportive of my business and has involved me in interesting business deals.
  3. Susan Brunasso: Susan has been one of the most supportive and customer service oriented people I know. I met her early on through the Claremont Chamber of Commerce, and I quickly discovered that she knows everyone – whatever random need I have, she will rapidly shoot off 2-3 referrals. Additionally she has been cornerstone to bringing me from text to visuals with photos and videos with extreme patience (starting off with 18,000 takes for 1 video…..)
  4. Jim Cenname: Jim is a a consummate professional, friend and many times repeat client who has been pivotal to my practice’s growth and success. He is truly a pleasure to work with and is committed to achieving results with an eye towards the value of people. He has also been instrumental in providing introductions, keeping in touch, giving feedback on my business and marketing ideas etc.
  5. Vicki Jeter: Vicki has been a trusted colleague and friend and has been instrumental to my business growth. When I look back at the origins of my business growth (and top sources), Vicki is tied for #1! She is also the catalyst for my Systems Pragmatist service line as she has the best business acumen tied with systems applications and design experience I’ve ever run across.
  6. Ellen Kane: Ellen and I met relatively early on through my APICS connections, and she has become a colleague, friend, ACA alliance partner and my 3rd top source/ catalyst of business growth with both referrals and collaboration (especially as it relates to my ERP selection services). She has got to be one of the most helpful and giving people I know which is why I always say that she is one of the only people who is “impossible to say no to”.
  7. Valerie Ladd: Valerie and I met when I joined the APICS Inland Empire Board of Directors in the very early stages of my consulting practice. Valerie epitomizes customer service and extends that to all of her relationships. Thus, early on, Valerie made introductions for me, was always there to lend an ear or provide advice / ideas, and was instrumental in getting me known in the Inland Empire. And I could not forget to mention that she has kept our APICS chapter intact with finances and is an unrelenting volunteer – just invaluable!
  8. K Means: K is not only a top-notch person and repeat client but she also shares knowledge readily – What a fantastic profession where you can provide value AND learn as you go (if you have someone like K in your corner)! K is also a fabulous combination of one of the best number-crunchers I know (her spreadsheets are truly amazing) and one of the most creative as well. She helped me put together my first graphic. Seems like a minor thing but a catalyst to my success!
  9. Jolene Myers: Jolene was my first long-term client, and I am most appreciative of her unrelenting confidence and support. We worked together at PaperPak previously, and she tracked me down early in my consulting practice to discuss working together (what could be better?!). Jolene has been extremely supportive, enjoyable to work with and when I look back at the origins of my business growth (and top sources), she is tied for #1!
  10. C.C. Vest: C.C. and I met early on in my LMA tenure via NAWBO. We kept in touch throughout the years, and later collaborated on selecting the optimal ERP system to support her company’s goals. C.C. and Dan were a true pleasure to work with (couldn’t ask for better!), and C.C. has been exceptionally supportive of me and my business at every turn – introducing me to people, suggesting events to attend, providing recommendations and referrals – and the list goes on….

Wouldn’t you say I am very fortunate? I value these people (and many, many others) and am extremely thankful.

I’ve yet to meet a long-term successful leader who didn’t value people. Have you told your team of their value lately? 

Did you like this article? Continue reading on how to Profit Through People:

Showing Thanks in the Workplace

Essential Skills of a Supply Chain Superhero