How measuring business performance can help drive continuous improvement

22 Nov 2021


Blog

How many times have you heard the words ‘I’m too busy’ from your staff? More often than not the people in your business will be running around dealing with the latest issue, again and again, stuck in a vicious circle where they feel helpless and frustrated.  In the worst case they may even experience personal burnout as things never seem to get any better. The reality is that this often happens in organizations with poor short-term planning and execution. To turn things around an effective short-term planning process, such as Integrated Tactical Planning, will help improve execution and drive performance improvement which is the key to freeing your employees from getting stuck dealing with day-to-day issues, so they can spend time on long-term business improvement. So, where do you start?

 

Measure performance
Measuring business performance provides essential feedback to enable you to monitor progress against the execution plan and indicate when control is being lost, so you can take measures to improve. This is an essential first step in exposing process performance problems, but the real value comes from understanding the reasons for non-performance and doing something about them. Therefore, it is essential that improvement measures:

 

What should you measure?

A starting point should be data. If the data in your planning system is inaccurate your planning system will be generating plans nobody believes in. This creates additional workload as everyone will devise their own plan because they do not trust the plans generated by the planning team. Data inaccuracy can create frustration and mistrust between functions, so addressing this improves the operating dynamics within the organization, reduces rework and cost.

Once data has been tackled the next question you should ask is, ‘are we doing what we said we would do?’. Understanding the likelihood of the plan being executed as intended, and thus the likelihood of it not being executed as intended, triggers actions for contingencies to be put in place. 

Understanding variability in foundation execution performance metrics including demand plan performance, supply plan performance, and supplier performance provides the basis for establishing buffers (typically safety inventory, safety time or safety capacity) to mitigate that variability and maintain the agreed levels of service to the customer. These buffers are in themselves a cost so improving the level of ‘doing what we say we are going to do’ can reduce the cost of buffers and the cost of "cleaning up" the consequences of not doing what we said we would do. This can include the cost of premium labour or freight to get back on track or the cost of appeasing unhappy customers or in some cases the contractual penalties incurred. 

Once data and doing what you said you would do are under control you can then turn your attention to measuring whether your business is getting better. One way of doing this is through measuring costs. Indicators of the answer to ‘are we getting better at executing our plan?’ will vary from organization to organization based on business type and industry, but you should be able to glean some answers by looking at your costs in areas such as premium freight, wastage/write-off, unplanned overtime, inventory holding, lead times and so on. 

 

To summarise

Having frameworks in place to measure performance is a basic foundation for controlling and improving your business processes and resulting deliverables. They should analyse the root cause of non-performance and drive corrective action in order to deliver improvement. 

Are you making the best use of your business measures and does your team have the time to use them to drive improvement and break out of short-term firefighting mode? If everyone is spending their time on the short term execution "hamster wheel" who is managing the medium to long term and ensuring ongoing competitive advantage in the market?

 

For more detail on measure frameworks used to support the Integrated Tactical Planning process, root cause analysis techniques and corrective action tools buy the Integrated Tactical Planning book, available in e-book and hardback.


Share buttons: email facebook linkedin twitter
© 2020 All rights reserved. Registered #3186. Website designed by RONIN Marketing