Business writers often describe some advantages of small
business as being more flexible, more nimble, faster-acting, and responsive
than their big business counterparts.
Based on my experiences working with both large and small businesses, I
agree with that assessment for the most part.
What I don’t see much written about is a comparison of efficiency.
Most large businesses seem to have embraced efficiency improvements.
These initiatives can go by the names of Lean Manufacturing, Six Sigma,
Continuous Improvement, etc. Efficiency improvements are made not only in the
Operations areas, but throughout the enterprise. But in big business, even
though work is being done more efficiently, there are still a lot of people and
processes that are taking place, and efficiency doesn’t necessarily translate
to responsiveness and flexibility.
So small businesses generally maintain that advantage. But
where small businesses really stumble is in the area of efficiency. There may
be several reasons, including a simple lack of attention to it, or lack of
understanding of what it means, or how to go about improving it, or even a fear
that it is a big initiative that the business simply doesn’t have the time or
money to accomplish.
So I like to make it as simple as possible. And the simplest
definition of efficiency improvement I’ve found is elimination of waste. If
small business owners would take even a few minutes per week to look around
their operation or discuss with their staff where they see waste, and then work
to stop doing it, they could immensely improve their efficiency. But the trick
to seeing waste is to know what it looks like, and for that, a good guide is
the “8 Deadly Wastes”. So for those of you who aren’t familiar with these,
let’s recap:
- Defects – What things in your business are mistakes? How much rework do you perform? How often is data entered incorrectly? How much time do you spend correcting mistakes?
- Overproduction – Do you make more products or perform greater services than you are getting paid for? Do you produce paperwork or reports that no one uses?
- Waiting – How much do your employees stand around waiting for materials or instructions before starting tasks? Do you find that your customers spend time waiting for something to be delivered to them (not just products, either… how about quotes, samples, or callbacks)?
- Not Utilizing Talent – If you trained an employee or two, could they do some of what you do? Do you listen to and act on employee ideas? How high are your absenteeism or turnover rates?
- Transportation – How much are you moving products around before using or shipping them? How much paperwork gets “walked around”, and how much time does that take?
- Inventory – Do you really need all that dust-covered stock on your shelves? How much space is taken up by stuff you don’t use, or that customers don’t need right now?
- Motion – How much time does your team spend looking for stuff? How could you organize workspaces to reduce the movement employees are making?
- Extra Processing – Do you perform quality checks that help catch mistakes not done right the first time? Are you providing more than your customers want or expect (and not getting paid for it)?
Every business has waste, and constantly looking for and
eliminating that waste is what continuous improvement is all about. It leads to
efficiency, and the result is more profits, more capacity, and easier working
conditions. Look around your business, and be honest with yourself. What waste
can you eliminate?
