Improve Efficiency in Your Business Using the 5 Performance Objectives
Businesses often focus too heavily on cutting costs when attempting to increase profits. However there are other ways to improve efficiencies and add value to the bottom line. In this article Devon-based business coach Clay Cowie explores ways a business can streamline and grow using the five ‘performance objectives’.
When it comes to growing your business, there are really only two options. You need to increase revenue or decrease operating costs (or both). Managers often adopt cost-cutting measures which can be counter-productive. They fail to see that severe cuts to operating costs can hinder productivity and may actually reduce profit in the long run.
But there is another way. A business can review operations using the five performance objectives of quality, speed, dependability, flexibility and cost. This method can be applied to any business that considers operational management as a core priority within their business. It allows a company to highlight areas of poor performance and identify cost reduction opportunities.
This is especially true in online businesses such as eCommerce stores where profit margins are tight and unnecessary costs can hinder growth or, at worse, lead to failure.
To bolster your business, try applying these five performance objectives to reduce costs logically without a reduction in productivity.
As a business owner or manager you should constantly look for ways to improve the quality of your processes to improve customer satisfaction and reduce costs. In an eCommerce company, for instance, you can make each warehouse packer responsible for the quality of their own packing in order to reduce the operational costs of returns and re-packing.
Customers expect to be served quickly and efficiently. This is true in any business, but especially online where you are competing against the retail giants who have speed down to a fine art. Make sure your products can be ordered, processed and delivered with as little friction and overhead as possible. This could be improved by negotiating ‘just in time’ delivery of goods with suppliers to reduce inventory value and storage costs, thereby improving cashflow and the pressure on finances.
Dependability is vital for the success of any business. Customers need to know they will receive their product or service on time. Miss a deadline or delivery date too often and customer satisfaction and sales will suffer. One way to save costs in an eCommerce business is to tighten up the warning controls on the dispatch system to alert management if the expected number of parcels are not sent out by the end of the day. This will reduce the number of parcels that need to be upgraded to expensive express deliveries.
There are significant service improvements and cost savings to be made by introducing flexibility into your business. The ability to change and adapt to market forces, competition and demand from customers can help your business flourish. Examples include the ability to easily introduce new products or services and being more flexibility on management. One way to tackle operational costs is to adopt a flexible working scheme so that busy periods can be covered without reliance on overtime.
The fifth performance objective is the simplest to understand and is generally a combination of the other four. Businesses should periodically assess all their costs to see where savings can be made. An efficient company should regularly consider new partnerships, suppliers, team structures and ways of working to minimise base costs and maximise profits.
So there we have it – a brief introduction to the five performance objectives and how they can be applied to encourage efficiency and support business growth.
It’s a simple, logical methodology that allows a business to discover significant savings while maintaining or improving productivity and therefore profitability.
Put the five performance objectives into practice to uncover new routes to business success and growth.
Clay Cowie is a business management consultant at S.M.A.R.T Turnaround Ltd. He provides coaching and support to help businesses throughout Devon and the South West thrive and grow. If you’re ready to turn your business around, please get in touch with Clay by calling 01752 683868 or emailing firstname.lastname@example.org