Though the general economy has significantly recovered from the recession in recent years, the manufacturing industry is still adjusting to tight budgets and decreased resources. In order to stay relevant, profitable and nimble enough to react to rapidly changing times, manufacturing companies are looking for ways to ensure lean operations, increase efficiency and strip out any functions that don't create customer value and serve their greater business goals.
The path from idea to invoice is long and can take a bite out of margins if not optimized; 60-80 percent of all costs related to completing a customer order are administrative based. A manufacturing operation encompasses administrative tasks, sales, marketing, IT, CRM, engineering, product development and other "behind the scenes" activities that don’t necessarily take place on the shop floor, but directly impact the bottom line. Non-shop floor activities are still a critical piece of the business, and ensuring they are as lean and automated as possible will help ensure company profitability. For this reason, a lean office is an important focus area for manufacturers seeking greater profitability and optimum customer satisfaction. Even organizations that are extremely lean on the shop floor can still be burning money through non-value adding administrative inefficiencies, duplication of tasks and unorganized teams and processes. With labor costs often exceeding 50 percent of an organization’s total operating expenses, employees who are under or ineffectively utilized have a major impact on the bottom line.
Here are three steps to take to move toward a leaner office:
- Get a grip on your processes — Going lean demands careful research and planning. The first step is to pinpoint and note every business process, from design to delivery. Careful analysis is then required to identify where bottlenecks or mistakes are causing problems. As with the shop floor, a Kaizen event is a powerful tool for discovering the answers to the questions you’ll need to answer about your operation. These include, how many steps are involved in completing a quotation? How do we actually hire a draftsperson? Mapping out your organizational process flows is the first key step toward your successful leaner office implementation.
- Get the right software on board — Instead of using paper-based methods or disparate systems to manage manufacturing operations, it’s time to think about leveraging technology to gain insight into the entire business. Consider business software with workflow functionality, which can also streamline tasks by automating the movement of work along the chain and fostering effective cooperation between colleagues regardless of their physical location. Automating tedious, time-consuming manual business processes is the key to success for any manufacturing business as it frees up executives from spending time on manual tasks and allows them to spend more time growing their businesses. It also allows manufacturers to set and meet customer expectations, the main ingredient of a strong reputation.
- Keep track of the results — The quest to create a leaner office is strengthened by the use of performance metrics. Create quantifiable metrics to monitor and improve the effectiveness of both the people and processes in the system. Fluctuations in those metrics can indicate that processes are not being followed, or that new processes need to be implemented to accommodate changes in your business. They also make it easier to compare performance to industry standards, giving management an idea of further room for improvement. The measures you choose will depend on the insight you need into your administrative processes. Areas to consider include, how do you define your value stream? What is the product or service created by your back office activities? For instance, if you focus on the process of creating quotations, you can think of the final document as your product. It’s then possible to define and measure the stages en route and identify where efficiencies can be realized. Concepts like "pitch" and "takt time" can also be useful diagnostics in the office. Be creative in their application.
In 2016, make it a priority to trim your office’s waistline, not just the shop floor. The right technology and organizational support can help your administrative teams realize significant savings in time and effort, resulting in an improved bottom line for your business.
Daniel Griffin is Director of Product Management at Exact Macola.