Increase your profitability | Business Gateway

7. Boost productivity

All businesses can minimise wastage costs and still remain competitive.

Measurement

Measure your operational efficiency on an ongoing basis. Put systems and processes in place that will enable you to get the most from your resources.

For example, you could regularly monitor how many employee hours it takes to perform specific tasks or provide services. If the time increases, it indicates inefficiency – the quicker you eliminate this, the more your profitability will benefit.

The commitment to managing productivity must come from the top to be successful. Communicate your productivity targets and measurements so staff feel they have something to aim at.

You can also consider introducing staff incentives to keep to targets – but define them carefully so quality is not adversely affected by increased speed of production.

Defining the key performance indicators (KPIs) that are most suitable for your business would give you clear targets to aim for. They should reflect your goals, be measurable and comparable and allow for corrective action to keep your targets on track.

Streamline your processes

Stepping back on a regular basis and questioning whether there are more efficient ways to reach your goals is no bad thing. For example, you may always produce a particular type of product at a specific time in the month. But would it ease your cashflow if you produced, shipped and invoiced it earlier, or later, in the month?

It’s useful to get an idea about how comparable businesses approach similar issues. This is known as benchmarking. Benchmarking can be on a basic, like-for-like level – such as comparing energy costs between similar businesses – or it can be more detailed, such as sharing data and analysing production and stockholding patterns with other businesses you trust.

The additional perspective that benchmarking offers can provide new ideas and momentum to make your business more efficient.

When benchmarking, it is a good idea to focus on similar areas to the key performance indicators (KPIs) you have already identified. Although there are no standard templates you can use to benchmark your business, you could take the following steps:

• Deciding on the areas of your business that you want to improve or compare to others. You could do this through research techniques, such as informal conversations with customers, employees, or suppliers, focus groups, or marketing research, quantitative research, surveys and questionnaires.
• Researching your business’ processes and functions thoroughly and calculate how you will measure potential improvement.
• Finding industries that have similar processes you want to introduce – if you want to bring in an integrated IT system, you should find other businesses that currently use these types of system.
• Locate the businesses that are profitable in the industries you are interested in benchmarking – you can do this by consulting customers, suppliers, or trade associations.
• Survey these companies for their measures and practices and identify business process alternatives. If a business is reluctant to provide this information, you may get it through trade associations or commercial market reports.