Fourth Internal Practice Operations

In this article we will discuss the 4th Primary Internal Practice every company must have to achieve 9 Figure Success.  This Primary Internal Practice is Operations.

Let’s begin by defining what Operations are, for there are various types of companies.  Our definition of Operations is the department that “creates and/or delivers the product or service” your customer has purchased from you.

There are many types of Manufacturers, their Operations department are the teams that produce and or purchase the piece parts which they then assemble into the finished product they sell to a distributor, retailer or end user.

There are many types of Service Companies, this includes all software programs and software services.  Their Operations are the employees or teams of employees that create or provide the service your customers have purchased from your company.

Many founders of Manufacturing or Service companies believe that what they do in their business is unique and unless you are in their industry you will never understand this portion of their business.  This assumption is false and almost always results in lower net profit than the company should be achieving and has the ability to achieve.

Let me share a very important secret with you.  Everything in your business and in life overall, is a Process.  Once you understand what all the various processes are and orchestrate all the processes to work in harmony with each other you will be able to scale your business to 9 Figures and beyond. 

To accomplish this, we must dissect every aspect of your business so we can fully understand what areas are working harmoniously together and what areas are not.  What areas are working efficiently together and what areas have become incumbered with bureaucracy.

Do you know that all Fortune 100 companies shut down every factory in their manufacturing operations every 5 to 10 years?  Why?  Because they know change is constant and not only the equipment has become obsolete but the methodologies they designed in their factory when they built it have also become obsolete.

They have learned that they recover the whole investment in the new factory in 3 to 5 years from increased productivity, lower operating costs and the new energy their employees have learning and using the new processes.  Stop and think, how do you feel when you get that new car?  How do you feel learning all the new features in the car?

One of our clients was a small manufacturer who had been in business eighteen years.  They had added new equipment over the years and never stopped using any equipment.  They simply repaired it like it was a car that needed repairs.  But like a car that is ten plus years old the frequency of the equipment breaking down increases and becomes more expensive. 

When this company had a problem building an order they would add additional processes to existing production lines to make certain they always delivered perfect finished product to their customers.  One of their product lines had morphed so many times that it was up to 167 procedures to build a very popular product.

We analyzed that product line and with our highly experienced team, we restructured this product line and reduced its procedures to 39.  They were now able to more than triple their daily production, reduce their material and labor costs.  Their employees were all energized and wanted to know what else we could improve.  The owner saw his net profit on this product go from 8% to 31%.  There were many other changes we helped this client with.

Service companies have the same issues as manufacturing companies, they just think their issues are different.

In most cases Services companies have a larger percentage of employees than a manufacturing company and therefore, inherently more ways for waste to happen.  A piece of equipment can be serviced and maintained so it avoids break downs.  However, people are far more delicate, far more sensitive and have the ability to work slower even though they appear to be working at their normal pace.

This requires much more understanding and finesse.  One of the most valuable ways to improve work place happiness, productivity and loyalty is by providing training classes to your employees.  If you have a large enough team of employees, it may be best to bring a trainer to your facility.  If you can’t shut down for several hours at a time, you may need to send smaller groups of employees to offsite training.

Please know and understand, all departments in your company need a good analyzes from a third-party service.  As Eric Schmidt says in his book, How Google Works.  Like every player in a professional sports team needs multiple coaches to help each player achieve the highest level of abilities, your Team of Employees need good coaches to help them achieve the best results for your company and that is why Eric Schmidt, hired businesses coaches for Google when he became its CEO in 2001.

Until Next Time …

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