While company processes and procedures are necessary, some may be distracting a business’s employees from delivering on company goals. Operational inefficiencies waste time, cost money, reduce quality, and impact associates’ morale and even client/customer retention. Since there are so many places to look for operational inefficiencies, business owners should start by assembling an advisory team that can help pinpoint inefficiencies and offer critical ways to improve. Ideally, the advisory team should consist of the business’s accountant, banker, lawyer and a small outside advisory board or group of trusted advisors. Each will have a different take, but all are interested in the company’s long-term success. Once the core team is assembled, here are four key areas to evaluate:
Employee onboarding is a prime example of something that can be either process-heavy or sorely lacking. Some organizations have weeklong orientations. Others’ onboarding consists of showing the employee the location of his or her desk and the coffee machine, and the new hire is off and running. Most employees would likely agree that the ideal is to strike a balance of efficiency and thoroughness.
Some procedures are more directly linked to a business’s financial health. Inventory control is a great example. Is there a robust inventory management system in place or is the business managed by spreadsheets? Is there an efficient method for quality control? Can the business easily produce inventory reports for management?
Collection procedures are another common opportunity for improvement. For example, if a business has receivables that are accumulating and may go otherwise unpaid, a collection agency could be a wise investment. They may get 30 cents on the dollar, but the other 70 percent is money the business might not have otherwise.
OUTSOURCING VS INSOURCING
Another place to look for efficiencies is outsourcing versus insourcing. There is not a “right” way to make this decision — and there are many factors to consider, such as cost, expertise and access to talent. This decision should be made with an understanding of the financial impact of both the choices. Many organizations simply haven’t run the numbers — and the results can be eye-opening if they haven’t done this previously.
Larry Fredette is VP of Treasury Management, Arizona, at Enterprise Bank & Trust.
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