Improving Your Systems

When seeking to improve the efficiency or productivity of a system, we must first understand the root of its inefficiencies and lack of productivity. The topic of continuous improvement is handled later on in this chapter and is the cornerstone of the "Lean" business philosophy.

The solution is found in your system waste. These are your “non value-added” system outputs including waste materials, wasted energy, unnecessary human resources, rejected products or services, and so forth. If you can reduce or eliminate them, your system will automatically improve.

What problems exist in the system you are currently working on? How can it be improved? Use the following list to identify your problem areas and to search for possible solutions.

1. Reduce Idle Time

Look for time gaps in your system. Must one task be put on hold while it waits for another task to be completed? Does a machine sit idle? Do your employees sit idle? If so, how could things be rearranged to make your system seamless?

Some possible solutions include...

1. Have several people (instead of one) work on the same task at the same time.
2. Have one person take a project from beginning to end instead of passing work on from one person to another.
3. Rearrange the order of certain tasks.
4. Out source certain tasks (or even the entire system).
5. Make use of technology/automation.

Does your system contain idle time? If so, how might you reduce or eliminate it?

2. Reduce Travel Time

Any time something or someone has to move from one place to another, time, energy and money are wasted. Certainly some travel time is unavoidable, such as the transportation of goods to a customer, but perhaps a more efficient route could be planned.

An often overlooked source of wasted travel time exists right inside many facilities. Poor facility layout can easily cause people to spend a large part of their day simply moving from one spot to another.

Does your system contain any unnecessary travel time? List any travel related inefficiencies, no matter how small, in the space below. Little savings eventually add up to big savings. Remember, it’s the little things that make a good business great.

3. Reduce Correction

Correction occurs when errors are found through an inspection check (either the company’s or the customer’s). The error must then be corrected, drastically reducing the efficiency of the system that produced the error.

While inspection checks are necessary, they can be time consuming, plus they often indicate further deficiencies in the system. You can reduce your dependence on inspections checks while increasing accuracy and quality by standardizing activities, using automation, and making people accountable for their own quality control.

House cleaners could put their initials on a sheet indicating exactly what they have cleaned and to what standard. One copy could then be left with the homeowners and one copy could go on file. Random inspection checks and follow up calls to customers could then confirm that the system was being followed and that standards were being maintained.

Consider building in mechanisms to ensure your system is followed completely. When steps are missed or glossed over, things inevitably fall through the cracks. What documents or other checks could be put in place to ensure the integrity of your system?

4. Reduce Complexity

You can dramatically reduce errors due to confusion by simplifying your systems. It's tempting to reduce the possibility for errors by detailing every step in the process, but it's not necessary to write every little thing down. When determining the level of complexity for a system, let your common sense prevail.

In some cases, you may find that a complex system would be easier to understand and use if it were broken down into smaller subsystems. For example, recruiting and hiring activities could be managed by one large system or by two smaller systems.

As a test, try explaining your system to someone who isn't familiar with it. If they don’t understand, perhaps it's too complex. Don’t make the mistake of thinking just because you understand it, everyone else will.

How might you simplify your system?

System Information

How do you know if your systems are working? How do you know if you are actually making progress, or if it just seems that way? Of course results are always visible at the bottom line. In the end, your business will either grow successfully or it will not, but if you wait for the final results to come in it’ll be too late. You need to know how you're doing while you are still floating, not on your way to the bottom.

What information is currently monitored in your business and how accessible are the results? Do you know if your employees enjoy their jobs? Do you know how many sick days each employee takes per year? What about each month? How about yesterday or this morning? Could you quickly compare that number to last year or the last five years? Do you know how many calls your sales people made last month? Do you know how many service calls your service people went out on last week? Do you know how many units your production team produced last month? Do you know how many were defective? More importantly, could you quickly and easily find this information out? Information is the central nervous system of your business. It keeps you up to date on the status of your business so you can make more informed decisions. It lets you know what’s working, what’s not working and can reveal trends to help you more accurately plan for the future.

Set up properly, it will provide you and your staff with valuable feedback whenever and wherever it's needed. Information must be collected and organized in such a way that it becomes accessible, meaningful and useful to those who need it, when they need it. Properly trained people can make intelligent, independent and immediate decisions, when they have access to the right information.

Organized accessible information that's, is your primary tool for strategic planning. Without it, you're just guessing. They might be educated guesses, but they're still guesses. There’s enough uncertainty in business already. Don’t add to it.

If something is too much work, it will often not get done

In the case of information gathering, this can be a problem. If it doesn’t happen consistently, your results could be skewed.

The solution is to make information gathering, sorting, and reporting as automatic as possible so your people can spend more of their time analyzing, planning, and executing. Set up your business systems so that they automatically collect and sort any potentially useful information in real time. For example, a computerized database could easily track the number and frequency of training hours taken by each employee. Tracking this by hand, however, might cause more work than it was worth.

It’s a simple example, but it makes an important point. It’s not enough just to collect information. Information must be easily and readily available or it will never get used.

Qualitative Information vs Quantitative Information

There are two basic types of information in your business. Qualitative Information based on individual judgment and discretion, and Quantitative Information based on measurable results.

Qualitative Information

Qualitative Information is subjective. It indicates how happy your employees are with their work, how organized your business is, or how well your customers understand your advertising message. But how do you keep track of subjective information? You can’t measure it with a tape measure or a calculator, but you can make a reasonable guess.

Gymnastics, for example, is an entirely subjective sport. The winner is neither the fastest nor the highest. The winner is simply the best. Competitors are given a subjective score out of 10, and the one with the highest score wins.

We can do the same thing with Qualitative Information for your business. When considering how happy your employees are with their work, for example, give them a confidential survey and ask them to rate their level of satisfaction out of 10, or if that’s not possible, make an educated guess.

Quantitative Information

Quantitative Information is a little more straightforward. If you want to know how many overtime hours your employees took last month, you simply track your employee time sheets and record the results.

Quantitative information allows for more tangible analysis (scenario analysis, simulation, risk analysis, etc.) Since it's made up of real-world tangible data, the data can be manipulated and analyzed.

Much of your quantitative information will come straight off of your financial statements and sales records. That’s a good start, but keep in mind your financial information is only one piece of the puzzle. It’s important to be sure, but at best it offers only a partial view of your business and at worst it can be misleading.

For example, investing money to upgrade your facility might decrease your profits in the short term, but increase them in the long term, while holding a sale might increase your profits in the short term but decrease them in the long term, because your customers decide to wait for your next sale. In this case, without a proper analysis of all the facts, your financial statements could lead you to the wrong conclusion.

What information do you need to record in relation to your system? For example, if some of your “widgets” are returned due to a faulty “gizmo,” it would be valuable to know exactly how many, which ones, and how often. If you design this type of data collection into your system from the beginning, then you and your staff will be able to make more informed decisions when the need arises.

List the information you wish to gather from your system in the space below.

How might you collect this information as simply as possible?

Information collected through your systems becomes the main resource for your KPIs. You can initiate the project of systemizing your business by creating a systems list. Start by reviewing your position outlines, then create a company-wide master list of all your systems.