Wednesday, 20 June 2018

Challanges & Solutions approach to improve synergy among directors or partners

Except for a few organizations, most of the manufacturing organizations are managed by founders supported by other co-founders or directors. The  directors can be family members, friends or joined in the organization as working partners either due to a common interest in the business or some other value proposition. 

Generally, the partnership management provides more advantages than running as individual ownership. However, if the partnership is not governed by clear policies, terms, it will result in chaos, affect the business as well as affect the relationship among the partners.

some of the typical challenges in a partnership firm among the directors or partners

1. Clarity on sharing responsibility and accountability
2. Communication issues  

Above challenges lead to decision dilemma or delay in decision making which affects the business profitability and growth.

1. Clarity on sharing responsibility and accountability :

One of the common practices, we are seeing in most of the emerging organization is that all the directors involved in all management activities. In this process, end of the day, nobody is accountable for the business results as each one aware of the proceedings and get convinced about mediocre performance. Also, as everyone is involved in a particular business issue, the biggest dilemma arises as who has to take a final call or decision on the problem. People love to discuss the problem, challenges, ready to brainstorm and when coming to accountability on result or consequence, stuck on mainly on the decision making.

When we see this pattern in one of our client's operations, we had advised having a clear portfolio for each director by defining roles and responsibilities. (But, already they have a designation for each director with functional orientation !!) Also, we had set the KPI for each one to bring the accountability on the results.

This had resulted in clarity among the directors and they felt their personal productivity also increased. Also when coming to business decision making, the clarity on responsibility and accountability helped them to take quick decisions which affecting their function as well as the business.

2.Communication issues :

one of the reason for everyone to get involved in all activities is due to lack of structured communication process among the directors. Each one of the them wanted to be included in all activities with the intention to avoid communication problem or relationship issues among them.But this leads to only time consumption and delay in decision making. 

Also, the organization instills mediocre performance culture and in some organizations, people at middle management take advantage of the multiple director's management styles.

when we come across in one of the client , we suggested two methods to overcome communication issues

1. Weekly Review Forum for all directors to share, review weekly key performance like sales , financce and other important business issues
2. Common KPI sharing among the directors on Google share 
3. Monthly Executive meeting to review P&L before 10th of every month 

The above solutions approach helped the partnership organization to overcome the typical challenges faced by the partners and also helped them with personal productivity !!

Friday, 15 June 2018

Simple checklist for identifying ergonomic risk in workplace

As we discussed in Why Ergonomics is not given importance in SME organization? a simple checklist with little awareness to engineers, shop floor operating team will help the team to identify the ergonomic risk in the workplace. This awareness further triggers the improvement in workplace re-engineering by the operating team.

In fact, REBA (Rapid Entire Body Assessment) is a structured approach to identify the ergonomic risks in the workplace, the given below checklist is easy to understand and quick guide to identify the fatigue in the workplace by the operating team as we experienced in more than 10 + SME clients.

Ergonomic Assessment Checklist

1.Awkard Posture

2.Handling loads and moving

3.Repetitive physical activities

4.Environment and unfavorable layouts

Thursday, 14 June 2018

Build an Environment and Process for Employee Engagement

One of the most fundamental reasons for a consistent growth organization is people and how they are engaging themselves toward the organizational goal. Developing people and bringing them together is the primary responsibility of the CEO or head of the organization.

Bringing the “emotional connection within” is a challenging task, but is possible with two factors. One is creating a positive environment in the organization and the second is establishing a structured, consistent process.

The environmental factor consists of providing basic amenities to the employees, visual management, and housekeeping through daily management. A positive environment triggers a positive behavior, action, and results among the employees.

The structured, consistent process includes identifying the engagement methodology for different levels of peoples, defining the administration of engagement initiatives, rewards, recognition plan, etc.

Given in the following text is the framework of employee engagement initiatives for different levels.

Maximizing profitability in emerging organization- a holistic approach

Irrespective of your external environment, you can maximize profitability in your business by looking at your opportunities holistically.I have given practical six approaches to improve the business profitability which we have tested and delivered result in our client base.

some of the approaches may be relevant to your business model as well

Hope you enjoy to watch this video clip and implement in your organization as well.

Maximizing profitability-a holistic approach 

When does your organization need external help?

     Each organization undergoes different growth cycle, and each growth cycle calls for different management practices, business processes, and employee engagement practices. For example, the systems and processes followed by the organization when it makes 5 cr~10 cr sales turnover may not be suitable when the same organization makes 25 cr or 100 cr turnover. The leadership team and the organization have to change in line with market/customer / external expectation. If the organization does not cope with the expectation, it will perish eventually.

Fortunately, a few organization adopts to the requirements on its own and managing the change thanks to the vision, growth mindset, flexibility of the leaders. However, most of the organization needs external help in bringing the necessary changes in business and management processes and inculcating the winning mindset among the people.

The purpose of seeking external people like consultants or coach is to look at the business in a different perspective, guide and handhold the team to implement the new practices and bring confidence to the organization by showing the business results.

Typically organization needs external help in any of the following situations. 

1. The business is not growing regarding sales turnover for last three years, or the growth is only incremental
2. The business is growing regarding top line, but the profitability  stagnant or downward trend or negative 
3.Both top line and bottom line stagnant and no clarity on the direction to take 
4. Increase in sales demand and product line/varieties, but struggle to cope up with growth. (struggling to meet the delivery, cost, quality, and efficiency requirements)
5. To transform the organization towards performance-based culture  by reorienting the old and new people 

Relook at your business performance and determine the right time to seek the external help for timely growth!

Wednesday, 13 June 2018

Why is Lost Order Analysis important for Organization?

Keeping continuous order pipeline is one of the healthiest indications of the organization. Even though ensuring order pipeline is perceived as accountability of marketing or sales function, it is actually cross-functional deliverables. 

Typically in a medium size organization, the following functions involved in order procurement process

1. Marketing or customer relationship 
2. Sales 
3. Engineering & 
4. Finance / Cost estimation 
5. Business head or pricing committee

Order procurement process indicates the speed, flexibility in decision making, teamwork, cost competitiveness and disciplined approach of the cross-functional team and management. One of the analysis indicates the organizational speed, decision making is "Lost Order Analysis."

What is meant by Lost order Analysis?:

Even though Lost Order Analysis is reactive, it analyses the reason for losing the prospective customer order. The reason could be a technical reason or regret from a technical perspective, pricing issues, delay in response from the organization, perception of the customer and so on.

This analysis will give clarity of why the organization is losing the potential customer's order.

What are the parameters to be analyzed? :

As said, this is cross-functional deliverables, and the business head must review the cross-functional team on the following parameters and the gap 

1.No of potential customers asked for queries  Vs. No of queries responded on time
2.No of quotes responded Vs. No of quotes converted into a sales order
3.Reasons for losing the potential orders

this analysis will give an insight about the organization on the following 

1. The effectiveness of marketing function to identify, grasp the opportunities
2. The cross-functional effort in ascertaining technical, commercial feasibility on time
3. decision-making ability on pricing 
4. Speed in responding and followup with prospective customers
5. Cost & Quality competitiveness in the market from customer's perspective

How frequently the organization needs to do  Lost order Analysis?

The frequency depends on the industry type, customer 's profile, lead time to respond. Generally, we suggest to our client to do the lost order analysis at least once in a quarter, as it is a reasonable time frame to understand the losses.

Role of business head:

The role of a business head is critical to conducting lost order analysis reviews as typically the functions point each other for losing orders and most of the time from our experience, the organization losing the orders due to both strategic and operational reasons.

The frequent review by business head will help the organization to improve the policies, business processes and of course to improve sales turnover of the business.

For example, when we initiate this analysis in one of our client, the team had realized that the majority of the orders lost due to High pricing. When we did deep analysis on the pricing, the cause identified was on the "cost estimation method" in which "lot size" was given overemphasis while costing in engineering function as well as at business head level. Once team identified the mistake and policies were framed on " lot size" in costing. After the corrective action,  we could see the reduction in the quote value and subsequently order conversion rate was increased significantly. 

The point is as a business head, if you do the lost order analysis frequently along with your cross-functional team, you will get a lot of insights about your order procurement process, and you can improve your business turnover.

 Also, this type of analysis will improve your cross-functional working cultures towards speed on decision making and execution

Monday, 28 May 2018

Managing Inventory with a holistic approach

In most of the organization, Inventory is a concern for the business head.

When we say inventory, it consists of Raw Material *+ Work in Process (WIP)+ Finished Goods Inventory.

* It includes raw material used in product + consumables + spares for equipment also.

Why inventory is a concern ?:

1. Holding  and funding cost of inventory is a burden on working capital as this could be used for something else
2. High  inventory occupies more space, need more handling and people deployment
3. Despite having high inventory, delivery actualization is not met on time, holding inventory adds fuel to the inventory cost, in turn, manufacturing cost

From a basic understanding of waste from a lean perspective, inventory is waste, and it is only a symptom. Inventory cannot be controlled or reduced at symptoms level as the inefficiency of all the manufacturing, supply chain, and order procurement process and effectiveness impact the inventory level.

Hence if you want to reduce or control inventory significantly, the causes have to be controlled with a holistic approach. It calls for strategic as well as tactic management.

Given the factors affecting the inventory either in RM stage of WIP stage or FG stage.

Depending upon the industry, the factors may vary a little bit, but with our experience in many manufacturing industries, the following major factors to be revisited for better inventory management.

1.Manufacturing factors
2.Engineering factors
3.Supply chain factors
4.Customer factors
5.Internal System factors

1. Manufacturing factors :

Most of the time, the WIP inventory primarily based on the lot size, changeover time, machine/plant capacity, reliability of machine/ plant equipment, the overall flexibility of the resources and the capacity imbalance among the process concerning customer's order pace or takt time.

when you want to reduce or control WIP, the above factors have to be revisited and re-engineered.

2.Engineering factors :

It includes the no of parts in the part, standardization among the parts and modular systems, Processes involved in manufacturing those parts and the stages involved in manufacturing either internal or external sources and so on

3.Supply Chain Factors :

This factor is more of strategic intent of the organization on the supply chain design. It includes the no of the vendors for each part, their location, pricing factors, lead-time to supply, the reliability of the vendor base and so on

4. Customer Factors :

It is more of external driven. However, the management has a choice to drive. It includes the customer profile either tier1, tier2 or OEM, the location of the customer, demand pattern, and forecasting accuracy, no of products or product lines, varieties and volume in each variety. Those factors govern the inventory of RM+WIP+FG 

5. Internal system Factors :

Irrespective of external factors and industry type, the discipline, and internal management processes govern the inventory to some extent. It includes Norm fixation for each commodity or part wise, budgeting, buyer accountability fixing, regular reviews, and management communication system among the team.

Inventory control without affecting the customer's order delivery is a continuous management effort and calls for a holistic approach.!