Productivity Affects Sales – How?

December 15, 2011 by 2 Comments

Meeting sales goals is one of our highest priorities, and productivity is a determining factor in whether or not we meet those goals. The degree to which our manufacturing processes are productive affects our capacity to generate revenue. Since our organizations exist to serve the demands of our customers, measuring productivity and understanding the degree to which productivity affects sales performance is worth exploring.

One of the difficulties in measuring productivity is that often our manufacturing environments have high-speed, automated equipment to produce our core processes, and secondary process are semi-automated requiring a labor component. While it may be a fairly simple equation to determine cycle times of our equipment-based primary processes, methods to determine cycle times in secondary processes requires a different approach, especially if customization is a requirement.

Although it may be difficult to measure, monitor and improve productivity, it is an important component to capacity and ultimately sales. This model demonstrates how productivity affects our ability to generate sales revenues.

Productivity 100% 50% 60% 70%
Budgeted Hours (at capacity) 2,000 2,000 2,000 2,000
Actual Hours 2,000 4,000 3,333 2,857
Lost Capacity (hr) 0 2,000 1,333 857
Lost Revenue ($50/hr) $0 $100,000 $66,650 $42,850

Looking at this model in terms of meeting sales goals shows how important it is to know what capacity issues may sprout up if productivity levels are less than expected. If I am planning to achieve a 15% increase in sales, do I have the capacity to meet the goals? Are the capacity issues due to productivity or a lack of available resources?

Theses are ideas and questions are integral components in planning for successful organizational growth and meeting customer expectations.

Generating sales opportunities, closing sales, increasing demand and developing long-lasting client relationships is only half of the equation. The other half is actualizing these efforts through our manufacturing environments. Productivity has a big impact on whether or not we fully leverage our sales efforts.

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5 Step Process To Removing Complexities In Manufacturing Processes

April 27, 2011 by 4 Comments

A good place to begin removing complexities in our manufacturing operations is in our secondary processes.  Often there is a clear delineation between a primary manufacturing process and a secondary process.  For example, an organization that produces plastic widgets may identify its primary manufacturing process as injection molding, the conversion of plastic into a widget.  Processes such as separating, assembly, packaging and finishing are considered its secondary processes.

Since primary or core processes tend to be the processes best understood within our organizations, it seems logical that gaining a better understanding of what is happening after core processing, creates an opportunity to reduce complexity.

When it comes to removing complexities, there are no quick fixes.  The concept behind this 5-step process is to gain a better understanding of how we currently produce our products.  Working through this process, we find a natural inclination to simplify.

    1. Create “as is” process maps – Document the whole route the product travels from it’s core/primary process to the next, or secondary processes, following the product through to its finished, shippable state.
    2. Define processes – Document processing specifications at each secondary process defined in the process map.
    3. Measure cycle times – Measure each process to understand process time requirements for each process articulated in the process map.
    4. Evaluate Sequencing – Evaluate each process and determine its fit within the larger system based on cycle time, finishing order and value creation.
    5. Simplify – Remove non-value added processes by reducing extra processing steps, product travel times and redundancies.

It can be difficult to peel back the many processing layers involved in our manufacturing operations.  However, once the manufacturing journey our products travel are stripped down to minimum processing requirements, we can begin to rebuild our processes with a new clarity.  This new clarity provides a shift in perspective, creating an opportunity for an intentional, re-focused effort to align our manufacturing processes with strategic business objectives.

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Primary, Secondary or Tertiary – All Processes Impact The Client

August 13, 2010 by Leave a comment

“Secondary and tertiary do not imply unimportant”

Every process a business performs has an impact on the client, regardless of how it is prioritized.  When we are engrossed in our day-to-day lives, it is easy to get caught up in our own mind space, task lists and email responses; forgetting perhaps, that our work effects others and is part of a larger process, system and ultimately a deliverable to the client.

When considering an organization, we tend to think in terms of what types of products and services the entity provides and attach a preconceived prioritization of its processes.  This prioritization is amplified by the way we are taught to think about organizations as we catagorize companies into various segments such as manufacturer, whole sale, retailer and professional services.  Whirlpool Corporation, for example,  triggers thoughts about appliances such as washing machines.  Manufacturing processes come to mind as its primary or core process.

The tendency to catagorize and prioritize work performed occurs inside our own organizations.  Depending on the products and services the entity produces and where we reside on the organizational chart, processes get identified as primary, secondary and tertiary.

However, the business entity is a whole organization whose purpose is to provide value to its client. Each process creates deliverables, either inputs into the next process or an output directly delivered to the client.  For example, a product’s features are shaped from information about the client gathered from marketing processes. Those features are incorporated through engineering processes, executed through manufacturing processes, sold through sales processes, delivered through distribution processes and invoiced through accounting processes.

Each of these processes impacts the client by how well these processes are performed. It is important to correctly process an invoice; clients would like to be billed acurately.  Likewise, clients would like their preference incorporated into products and services.  While processes may need to be prioritized for planning, resource allocation and improvement efforts, the ranking a process receives does not designate it as irrelvent to the client.

 

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