Create a Sustainable Company
Many companies are feeling better or even good these days about their business outlook. At a recent trade show, there were thousands of companies present with large displays and a renewed focus on business growth. The attendees were upbeat and positive and primarily there on a mission to buy new equipment and become better at what they do.
Although everyone was upbeat and realizing it is time to invest in the future, the conversations often turned to systems and processes necessary for sustainability and growth. People were asking, “Beyond investment in technology, what additional key elements of the business model are needed?”
When assessing a business, Harbour Results looks for sustainability through synchronicity of the following five critical factors:
- Data and information: Accurate and readily available data to drive decisions
- Operational excellence: Continuous improvement culture with sound business systems driving throughput
- Technology and training: Utilization of industry specific know how to drive quality, cost and delivery
- Material: Supply chain management from material specification through conversion and recyclability
- Equipment & Tooling: Closed loop system of design, specify, acquire, maintain and disposal of production assets
There is no single answer to sustainability, however, these five critical areas are the foundation for success. The challenge is “putting it all together” into one agile and sustainable business model.
In the next series of articles, the team at Harbour will drill deep into each of these critical factors to share best practices and tactics to help businesses better understand what will drive sustainability in these areas.
Let’s begin with “data and information.” How many companies have good data to make sound business decisions on a daily basis? Does your company have monthly metrics reporting? Are they lagging indicators? Is your team frustrated that problems were not caught earlier?
These are the statements that most of the companies we visit tell us about their data and information. The best companies in the world are able to determine, as they walk through their facility, whether or not they have made money that day.
Good data and information starts with your IT or ERP system. There are many companies on the market working to sell their systems to manufacturing companies. Many people are not sure which is best or how it will change their business. The truth is that many of them are very good systems.
The problem is not usually the system, but the accuracy and use of the raw data. When systems are launched, companies often ingrain current weak systems into the new providers software by either having them modify the code or create “work arounds” to the system. These problems combined tend to lead to the company being just as frustrated after installation as they were before and worse yet, the pain of installations causes new problems and headaches.
The companies that have done the best with new systems or even optimizing current systems are those that stepped back from the task of implementation and first looked at functional requirement for optimization. They use either current continuous improvement staffs or outside operations advisors to determine what the ,company should measure and how to optimize it before system install. They then work with the IT implementation team to write a functional spec that works for their business rather than simply installing the standard system.
To make sound business decisions you need to have accurate information on a daily basis. Your system should provide realtime operational metrics (daily production, scrap and downtime), management metrics (throughput, utilization, on-time delivery) and financial metrics (profitability by job cash flow, balance sheet).
Without data, companies tend to focus and prioritize their improvement efforts by hearsay and tribal knowledge. The other four critical elements cannot be optimized without readily available accurate data.