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You will have heard the saying - if a tree falls in the forest does it make a noise, well Productivity is kind of the same, Are you really productive if no one knows or rather how do you know you are productive if you are not actually measuring it? A question we always ask clients is how you view your business? Is it effective, productive, do you see any waste in your business processes as they stand or is it humming along like a well oiled machine! How are you measuring those things & why do you measure those things ?
We thought it would be a great idea to share a series of posts on productivity to answer a few questions like:
Ask 10 business leaders what is productivity and you'll likely get 10 different answers, ask a LEAN practitioner or a Theory of Constraints advocate or even a SCRUM master what productivity is and you can pretty much guarantee that the answer will be different again, to a point. You see everyone has a spin on what being productivity is, they infuse this with buzzwords and phrases from their particular view point and convince us that it's the only true answer and it can get a little confusing.
When we do ask the question we tend to get answers like "It's how well we execute the plan" or "It's about building quality 1st so that we don't have waste in the system" or even " Productivity is how well we use our resources" which are pretty buzz wordy and say Ok.. how are you measuring those ? what tends to follow is either a blank look or a pile of more "buzziness" (not sure if this is really a word but it should be.... it is the act of utilisign a diatribe of buzz words to sound smart) Did you know there is actually an OECD manual on Productivity? if you get board you can read it here
At Many Caps Consulting we're fans of simple, as we've said before, simple is good, it gets done and it gets buy in so we'd like to give you a simple answer to this question. At it's basic, level Productivity is simply a ratio of how much you get out based on how much you put in.
So here is an example: You plan to build 10 big Red Trucks, each truck takes 10hrs to build so you plan for 100Hrs. You now go and build your trucks and guess what it took 110hrs to build them all, assuming that they all took the same amount of time to build that was 11hrs per truck so in the 100 hrs you had you built only 9 trucks so you were 90% productive. Or were you?...
What if of those 9 trucks you built you found that:
So out of the 9 trucks manufactured actually only 5 of them are any good to you so guess what.... you are no longer 90% productive, your only 50% productive, the rest is waste.
Think about it this way, you just spent 110hrs building 10 trucks, which is 10more hrs than you wanted to so you have eaten into your profit there. But 2 of those you can't sell because they are green so they go on the shelf. 2 go into rework and lets say you add another 2hrs to each of those to get them to a state that you can sell them. Now you've spent 114hrs and only have 8 trucks you can sell so each truck is now effectively cost you 14.25hrs & not 10hrs, that's a 42.5% over run...
It's only productive if you build the right thing to the right quality (note building to higher quality than is required is also not productive!) i.e. if you can't sell what your building and charge what you have calculated you need to sell it at (costs to produce the item or service plus profit margin) it's not really a productive use of your resources is it?
If you waste time building something that wont sell then clearly that's time you don't have available to build something else that will sell (plus you have to carry the costs of the thing that didn't sell!)
So.. we ask again look at your business and ask...is it effective, productive, do you see any waste in your business processes as they stand or is it humming along like a well oiled machine!
If you need any support in developing or improving your business then click here to make an appointment and find out how we can help you Make Things, Better
You can also call John on 0211649739 to set up a meeting
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