19 Feb Understanding How to Grow
Are you looking to grow your business more quickly in 2019?
A business, just like any other living and growing animal species, evolves, transforms and eventually becomes extinct. A growing business must face many obstacles and anyone choosing to engage on this path is aware that decline is also part of the possible consequences.
Don’t worry, I don’t intend to teach you biology. However, let’s take a look at the growth of a business and the various ways this can happen.
I want to begin by saying that based on my real-life experience within a variety of businesses, small, medium or very large, I see three types of growth.
Growing through sales
This is a classic scenario. Generally speaking, if your business is generating more sales, there is a good chance that your operations are going very well and that your company is increasing its market share.
Any activity resulting in revenue growth could be placed in this category. Growth through acquisition is a perfect example.
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Bleeding the suppliers
Of course, this is a metaphor, however one that often mirrors reality and is pretty close to the picture it brings to mind!
By this, we mean negotiate with the suppliers as much as possible to sign highly beneficial contracts that could almost be called “a steal”.
Lower cost prices entail reduced costs and as a result, allow you to set very competitive sales prices for your clients.
Growing from within
I really like this second metaphor. Often used by our parents, you may already have heard this one.
In the context of this post, growing from within simply refers to the process of improving one’s practices, something many manufacturing companies tend to neglect over time while they constantly focus on seeking more growth.
One day these businesses will wake up to find that their processes have aged 25 years and are now obsolete. And I am barely exaggerating, especially when it comes to North American manufacturers!
Is this also true of your manufacturing company? Whether the answer is yes or no, here is a list of four technologies you should consider today! By the way, the survival of your manufacturing operation depends on it.
For a manufacturer, understanding growth means knowing how to juggle the three approaches mentioned above. It means knowing how to simultaneously manage different growth options, just as you might do if you were managing a diversified investment portfolio, meaning that your decision to pick an option will have an impact on the other alternatives.
Based on my business experience, I will focus on the third way of growing, namely the improvement of business practices, processes and methods. Here are a few tips to succeed with this component of your business growth.
Within the business, this means making sure that anything that comes in at one end (for example, raw materials, components or parts) and comes out the other end (finished goods, by-products, etc.) is processed in optimal time at the lowest cost, while always keeping the quality promise to the customer.
A central system integrating end-to-end all the information generated by the various phases of material handling allows all the departments to work together in order to optimize the processing time.
Apply the KISS Principle (Keep It Simple and Stupid)
Nothing beats simplicity.
Identify your key processes, such as receiving, inspection, transformation/manufacturing and shipping, then look for ways to improve them by making them simpler. You could repeat this task as many times as you want, I can only see advantages in doing so.
Indeed, mapping out your processes may seem complicated when you think you are dealing with several exceptions; however, often times we find out there are much fewer than initially thought. So, don’t be deterred and go for it!
This step also provides you with a comprehensive overview of your organisation’s daily operations and often helps you question and revisit your old ways of doing things. We should not be afraid to divide processes.
For example, a single employee who receives and inspects goods could be replaced by two specialized employees, one who does the receiving, and the other in charge of inspection. These two tasks therefore become two separate activities that can be performed in parallel instead of one after the other. By specializing, each employee becomes more productive, can achieve more in less time and the risk of error is significantly reduced.
If your curiosity has been piqued, this type of work segregation is also known as Scientific Work Organization (SWO).
If you would rather improve the productivity of your workers, we have listed several real-life examples linked to augmented reality.
Speaking of productivity, Salesforce CPQ simplifies the whole process of writing out contracts and allows sales representatives to automate their tasks. Here is how.
This tip complements the first two (a and b), in that I am advising that businesses promote clear communications and a flexible mindset in every initiative focused on process improvement, in order to facilitate change at all times. This way, change will become the norm over time.
Beyond the tips and principles derived from my corporate experience, I have to conclude this article by touching on the improvement opportunities afforded by the technology around us, especially since it is part of my daily consulting responsibilities with Nubik.
These improvement opportunities are the result of the digital transformation and are without a doubt an asset to facilitate business growth. For example, the rise of big data, which made a late appearance in the manufacturing sector, offers a wide range of possibilities.
However, we have to know what data to collect, analyze and interpret in order to improve. If you don’t know where to look, you will not be able to improve and you will end up spinning around in circles!
This in fact will be the topic of my next post. I will discuss in more detail a few performance indicators that must be in place, with the right systems, to help us take advantage of the depth of data, and ultimately, grow the right way!
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In the meantime, discover the potential of Rootstock ERP, a Cloud-based ERP solution especially designed for the manufacturing sector. I am attaching a descriptive video below.
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By Pierre-Alexandre Décary