Innovating Operations and Processes
There are many ways to boost your profit margins, but an often overlooked one is your operations. Perhaps because investigating and improving upon operations requires more work, many companies avoid investigating operational potential for improvement.
Operational improvement and excellence is a low-cost way to improve your business that will maintain your manufacturing output for longer than a marketing campaign or an acquisition. Nowadays, with issues like global competition, added supply cost, lower manufacturing revenue growth, supply chain disruptions, and labor issues, betting on improving your operational effectiveness can net you better customer satisfaction, lower costs, lower prices, and better quality.
Innovating in Operations
Of course, with the advent of industry 4.0, improving your effectiveness is not enough. You also have to look for ways to innovate your operations. Innovations can benefit your firm with:
Operational Innovation can present itself as:
- Fundamental shifts in department processes
- New business models
- New technology and tools
One of the biggest issues in Operations and Processes is, as mentioned, that it is a portion of the business that often gets ignored. Some of the reasons that lead firms to have operations ‘swept under the rug’ include:
- Undervalued: In many corporations Mergers & Acquisitions, or buying and selling divisions, are the headline grabbers. With such a large spotlight on the ‘quick and easy’ thing, those that put in the hard work to update and innovate in operations with development and procurement do not get the support they need.
- Unseen: Ground floor processes and transactions often fly under the radar of most senior managers, which tend to be focused on longer term strategy, budget, and other big picture issues. And with no managerial process audit program in place, some will be unwilling to ‘get dirty on the shop floor’. This, of course, is a poor train of thought that leaves your main production engine as an afterthought when it comes to looking for a competitive advantage.
- Uncounted: Another issue that arises from operations is that the way financial data is collected and viewed dominates many modern reports and dashboards. However, operations changes and improvements can be more difficult to measure.
- Unowned: While you may have a chief operations officer, most department heads or line managers have little interest in change unless pressed by the executive branch. In other words, since there are no rewards to improving a process, why bother spending the resources to do so.
- Unimportant: As seen above, most companies do not put any focus in innovating their operations and processes. Companies will spend the money to acquire new systems and process methodologies, like customer relation management (CRM), supply chain management (SCM), Six Sigma qualifications, or Lean methodology processes, but they never maximize their returns by looking at the operations the systems and methodologies will affect. These systems and processes can help but they need your constant attention to ensure they are used to the fullest.
Starting Operational Innovation
Even with all the roadblocks, you should still find a way to bring operational innovation into your organization. Champion innovation by “getting your hands dirty”. You can find productivity increases and cost savings that lead to all the benefits mentioned above and others like improved inventory management and control, decrease in labor hours, or effective cross-skilling and upskilling of your workforce.
Innovation can be found in:
- Assumed constraints – Are there places that are assumed processes that don’t actually have to be. For example, storing things in a warehouse is the assumed process, but you can also cross-dock goods.
- Outside inspiration – You may find ideas on where to innovate in other sectors or industries. For example, bar code scanning is common in retail, but you can add barcodes to work centers and inventory locations.
- Normalize ‘special cases’– Your firm may have special work cases. Why not use them all the time? For example, that process you only use for emergency rush orders could become standard operation procedure.
- Work dimensions – Rethink your processes by mapping them out and then looking for where and how it can be improved.
By innovating your processes and operations you will:
- Disrupt with new – Instead of betting on conventional practices, your new operations, processes, or tools (perfected with Plan-Do-Check-Act or another method) will be a positive disruptive force to your firm. Run the process as a pilot project so that you can minimize the impact during the learning phase.
- Innovation as culture – As you start innovating operations, it should become part of your corporate culture to innovate wherever you can. By applying Lean to the shop floor and the office, you can start a culture of betterment. This innovation culture will improve your performance and competitive edge in your sector.
Most manufacturers already know that betting on your operations and improving upon them will net positive results to your productivity and profit. However, looking at your processed through a new lens can help you find hidden efficiencies that you had overlooked.
The best part of operational improvements is that they are difficult to duplicate. This means that when you maximize your productivity, it puts you ahead of your competition. And when you keep an innovation culture, your operational improvements will keep you ahead.
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