I often meet entrepreneurs who try to deal with tough times by cutting costs. Unfortunately, cost cutting sometimes gets in the way of making a business more productive and competitive.
That’s why I suggest focusing on creating efficiencies in your operations to reduce or eliminate redundancies, wastes and errors—in the process helping you save money.
Technology can play an important role in creating lean and efficient processes. It can help you reduce or eliminate duplications and delays in the workflow, as well as help you speed up by automating specific tasks.
Here are three areas where efficiencies can be created by using technology.
1. Inventory management
If you hold and manage inventory in your retail store, warehouse or manufacturing plant, you need to know which items you have, the quantity you have in stock and how much they’re worth.
An inventory management system can help you run an efficient warehouse by ensuring you have the right level of stock.
To start with, you’ll want to ensure that the items you receive are entered in an inventory control system. I suggest scanning them with a bar code scanner as soon as they are received. This will eliminate redundant entries and allow you to record any problems with your delivery right away.
Improve your fulfilment efficiency
You can also use software to direct staff on where to store items. To do this, you may have to scan the bar codes of items being stocked. Implementing this process will improve your efficiency and reduce errors when it comes time to pick items to fulfil an order.
Picking and packing can also be system-directed with the use of a hand-held bar code scanner.
Optimize your stock levels
An inventory management system can help you maintain stock at an optimum level, taking into consideration sales volume (how much you sell), sales velocity (how quickly you sell), time of the year (Christmas, back to school) and upcoming promotions.
The system can also help you take account of lead time from order to receipt, ensuring you don’t run out of stock while waiting for an order. And it can efficiently manage your inventory levels to realize just-in-time fulfillment.
A good inventory management system can also update your customers’ systems in real-time, generating and emailing shipment confirmation as soon as it goes out.
It may also be able to handle a wide variety of inventory types. For example, it may be able to differentiate between raw material, work in progress and finished goods; as well as items available and ready to be sold, quarantined or allocated to a particular order. This can save you money by reducing mistakes and provide you with more accurate information.
2. Project management
If you have a project-based business, for example a professional services firm, an HVAC or plumbing service company, a construction firm or a make-to-order manufacturing operation, managing projects efficiently is critical for on-time and on-budget delivery.
A project management software can help by building a work breakdown structure that organizes a large project into a list of tasks that need to be completed.
You can also input time and material needed into the software. It will then create a budget and establish timelines you need to meet to complete the job. A project management software can also prevent unnecessary delays due to material unavailability by creating a list of materials you need to purchase or hold at the start of the project.
Keep track of your progress
As the project progresses, the software can track which tasks have been completed and any variance between the plan and the actual time and materials used for each phase.
For example, a kitchen remodeling company may have work crews entering information at the end of each day, including tasks completed, time spent, materials used, issues encountered and even pictures of the progress.
The software will calculate the actual time and material costs against the estimated budget and timelines for that project. In this way, deviation from the budget can be managed in real time and corrective actions can be taken to ensure project profitability.
3. Dashboard and metrics
To create efficiencies in your operations, you need to know how you are doing and be able to measure your performance against an established benchmark.
Establishing appropriate Key Performance Indicators (KPIs) for the overall company and for each business function is the first step in this process. For example, you may want to track sales figures (actual and in variance from the benchmark) to give you an idea of the overall health of your business.
Each manager may also need a dashboard to measure efficiency and productivity in their department. What that dashboard measures will depend on the department.
- Production managers can measure how many items were produced and how many were defective.
- Warehouse managers can measure how many orders were accurately shipped on a daily basis.
- Sales managers can track the number of leads in the sales pipeline against the close ratio.
Dashboards that are available to managers and staff have the potential to significantly improve awareness of how well the company is doing. They can also help staff realize the important role they play in the success of the company—allowing them to be more involved in the operational efficiency improvements.
A tool to get you started
We have seen just three examples where technology can help with improving efficiency in a business. In my experience, almost every business can benefit from investing in technology to improve its processes. It’s just about finding the right tool for the right job.
What about your business? Is it using technology to be as productive as it can be?
A great way to start measuring your business productivity is to use BDC’s business productivity benchmarking tool.
This free online tool will allow you to compare your productivity levels to those of other Canadian companies in your sector and suggest efficiency improvement projects to boost your productivity.