Times are tough, especially with the recession hitting the UK following lockdown and COVID-19. How do we reduce costs without compromising on quality or customer service?
Times are tough
The latest OECD forecast suggests that Britain’s economy will slump by 11. 5% in the next year. The British Chambers of Commerce have estimated that 20% of small businesses will go bust as a result of the coronavirus pandemic, and the number of companies being dissolved has increased by 50% since this time last year.
Businesses are going to need to reduce costs, and become leaner and more efficient if they are to survive.
You need to make sure that you are taking full advantage of the grants and loans that are available right now. In particular, the “Bounce Back” loans are particularly good value. On the other hand, using a loan to fund cash flow is a recipe for disaster – you need to invest this money in the long term future of your business.
Managing cash is key. If you haven’t already done so, take a look at our blog “How to Hold Onto Your Cash” for tips on how to manage your cash flow.
There is still more you can do – cutting costs, or doing more with less.
How do you save money without compromising on customer service?
First you need to understand how your product or service adds value to your customer. If you do nothing else, do this. Your marketing messages can tap into that value, and be more focused. It will also give you a better understanding of what your ideal customer looks like.
Next you need to look at what you do from a customer’s perspective.
Map out your process
Map out the stages in your process from order to invoice in as much detail as you can. Then identify which steps the customer would think of as adding value.
A handy way to do this might be to consider:
- Would the customer be prepared to pay for this?
- Does it change the product or add to the service in any way?
- Is it always done right first time?
Look for waste
The concept of “Muda” (wastefulness) comes from the Toyota Production System. This approach transformed manufacturing processes in Japan and then throughout the world. It applies just as well to office based processes.
The commonly accepted eight types of waste are:
- Transportation – moving things, picking them up and putting them down – is the layout of your office or factory optimised for what you do?
- Inventory – excess stocks, queues of parts or paperwork between process steps
- Motion – is everything you need to hand?
- Waiting – idle time
- Over-processing – features or steps that don’t add value from the customers’ perspective
- Over-producing – making too many or too much, making it too soon
- Under-utilised skills – not making the most of the talents or knowledge of your workforce, asking them to do tasks which could be automated
- Defects – mistakes, rework, scrap, customer complaints
Throughout this process, remember to look at things from the customer’s perspective, so that you can make sure that you don’t compromise on quality or customer service.
Once you have identified the waste in your process, you can work actively to remove it.
Remember to test and measure to make sure that the changes you have made are having the desired effect
Standardise the process
Finally, document your new process and share it widely. This doesn’t need to be chapter and verse – it could be a video, or a simple flow chart, just as long as it captures the steps and the standards required
If it’s so simple, why do so many attempts at lean fail?
Generally, attempts to make processes more efficient fail because the management team hasn’t done enough to engage the people who are involved in the process. Now more than ever, people will be anxious about their future, and suspicious that efficiency measures taken now may lead to job cuts in the future.
What are the keys to success?
You need to be clear on your vision for the company and what you are trying to achieve. You need to share that widely with your employees. It is not enough that the people know what that vision looks like, they need to be inspired and energised by it.
With any process of change, frequent and consistent communication is key. Even when the news is not so good. People appreciate transparency and honesty, and are more likely to trust the good news if they know that you are going to be honest about the bad news.
Communication needs to be two-way – you need to understand how they feel about the change so that you can take steps to reassure them.
Finally, your team need to be fully involved in the process. They will be sure to tell you when they think what they are doing is a waste of time or effort, and will have some great ideas for how to improve the process.
If you can engage in active listening, and taking positive action on what you have been told, it will have benefits which reach far beyond this project. Employees will be:
- More engaged in your business
- More likely to put forward positive ideas in the future
- Personally invested in the new solution
- More likely to follow it in the long term
What is the next step?
If you want to find out how you can make your business leaner, fitter and stronger for the future, get in touch with us: [email protected], or call 02921 111 262 and ask for a call back from an adviser.
Our process is to look at every aspect of your business, identify where you are doing well, and identify where you can add more value to your business. Our proven eight-step programme will address the issues in your business. We are there to guide, advise, act as a sounding board, and hold you to account, so you can have more time, more money, and more fun.