Maximizing productivity through improved management theories By David Rajakovich
Businesses all across the globe share a common goal of increasing productivity, customer satisfaction and profitability, but in many cases, the go-to response is to blame the staff, rather than the management, when things go wrong. The reality, however, is that strong leadership and a focused productivity strategy are central to the success of any company or organization, and examining different strategies and scenarios is the first step on the road to success.
If we look at the manufacturing and supply chain industries, at a high level, you need to be data-driven in making capacity decisions. In this regard, finding real probabilities – not just based on historical data but how the macro and competitive environment have changed – is key. Another key initiative is to examine different scenarios – such as what is the upside vs. the level of risk that you are taking on – and making sure the Board agrees with the approach. A very common mistake is encouraging groupthink by having the CEO give his or view of the environment first. Don’t ever be tempted to stray down this road. In fact, the CEO should say as little as possible about what they believe until soliciting other opinions. Undoubtedly, the Jury of Executive Opinion Method of decision is one way to avoid bias. As well, the Delphi method is similar in that it pools anonymous expert opinions to reach an accurate forecast and prediction of the future.
Another key to success is to be creative in the supply chain. For example, consider using ‘real options’. If the upside of capturing a market by moving quickly is large enough, paying suppliers to partially complete your product – even if it might go to waste – may be a good investment. Demand sensing is a relatively new idea, enabled by the Internet of Things, and using real time data to re-route shipments can maximize your profitability by ensuring products are getting to the places where they are selling the best. Of course, demand shaping is related, in that you can use promotions, discounts and pricing decisions more generally to influence what the customer buys, keeping that finished goods inventory turning over as rapidly as possible.
There are so many easy mistakes made by companies, but it’s just as simple to avoid them too. Make sure that your metrics are financial in nature, and that it’s not just throughput for throughput’s sake. In my experience, managers tend to want to show good throughput, even if it ultimately results in stacking high value inventory in a warehouse. Remember, this does not contribute to the financial performance of the company, so don’t make this mistake. I would also not recommend looking purely at production per square meter. I’ve seen that result in a very cramped work space that only served to lower morale without any real financial gains.
Establishing a supply chain control tower is good advice and the better – and more timely – the information you have, the better your decisions can be on pricing, as well as on who gets how much of a scarce product, reacting to supply shortages, etc. Investing in tech, machinery, etc, in a way that maintains flexibility is key. Remember, you don’t know what products you’ll be producing in a few years’ time, so you need to stay flexible. Continuing to invest for the long term – using the Internet of Things to track global shipments – might seem like a daunting project, but if there is a clear plan to use it to optimize decisions, it could help gain you a competitive advantage.
One of the most important factors in productivity is getting the product design right from the very beginning. If it is designed with shipping it in mind, supply chain costs will be lower. If it is designed with manufacturing in mind, it will share as many common components with other products (or future products) as possible. With this in mind, it is vital that you involve production and supply chain teams early in product design. Use learning from the world of software – e.g. cohort analysis – to hone in on exactly the right products to build. This will mean you are building a great product that your clients love that is inexpensive to ship and efficient to build. Cohort analysis is about dividing your customers into groups – e.g. based on month of purchase, etc. When there are tweaks to the product, measure how it impacts satisfaction, sales, etc. That will point you in the right direction for future product updates.
The influence of strong leaders and the importance of understanding modern management theories should never be underestimated. Research by Digits found that over 50 percent of UK adults think strong leadership is key to organizational success. In fact, it was revealed to be more integral to company-wide happiness than teamwork skills, problem-solving and conflict resolution. There is no doubt that leaders who have mastered the positive business mindset will bring their team with them on the journey and empowering your team is a huge part of this. When the collective shares a mindset, they don’t need to ask you about every decision – they know the answer before they even think of asking.
US born thought leader David Rajakovich grew up in Pittsburgh, Pennsylvania. Having graduated the prestigious La Salle University, and served in the US Army, David has gone on to work in top positions across several technology, e-learning and procurement companies. Familiar to the C-Suite, he has experience as Founder, VPO, Managing Director and CEO. At Skill Dynamics, David became a hugely positive disruptor in the world of e-learning, developing innovative new ways to transform higher education in business. Looking to the future, he plans to commit to a start-up or early-stage company and, through hard work and investment, take it to unicorn status.