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  • We are functioning more smoothly as a team, our staff are happier and we are having conversations that we simply were not able to have two years ago.


    Today we hear from Steve Orr – Deputy Chief Executive, Local Government, Nowra NSW

    Are these the kind of results you have been looking for?

    “At the beginning of 2012 the Division put in place a new organisational structure to more effectively align the Division with the needs of the local government sector. As part of this a number of people entered new roles and took on new responsibilities. We recognised that in order for the changes to work we needed to improve our leadership strengths, in addition to being managers.

    We have worked with Jason over this period in a series of workshops to train and develop the leadership capabilities within our entire Management Group. The workshops were tailored to match our specific needs, the issues we were facing, and gave us tools and approaches to apply back into the workplace immediately. At the end of every workshop people had an individual and a group plan to take back and run with.

    As a consequence of this work our new structure has delivered sooner and we are delivering effective results quickly and in a collaborative manner. We are functioning more smoothly as a team, our staff are happier and we are having conversations that we simply were not able to have two years ago.

    The work we have done with Jason throughout this period has helped us reach this point in a faster and smoother way than would have been possible if we had gone it alone.”

    Steve Orr – Deputy Chief Executive, Local Government, Nowra NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


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    Start Here, Now: Identifying And Removing Bottlenecks In Your Business


    IN THE PREVIOUS INSTALMENT OF OUR RECENT BOOK ‘MANUFACTURING MONEY’, THE AUTHORS DISCUSSED THE FINANCIAL ASPECTS OF STOCK AND EQUIPMENT. IN THIS ISSUE, THEY DESCRIBE SOME DANGERS OF WHICH BUSINESS OWNERS AND MANAGERS HAVE TO BE AWARE ON THEIR WAY UP TO A ‘BLACK BELT’ IN A MANUFACTURING AND DISTRIBUTION BUSINESS, TO CREATE “A BUSINESS THAT IS TRULY IN CHARGE OF ITS OWN FINANCIAL DESTINY”.

    So far we have defined what you want as an outcome of the change program; we have looked at how to understand our financial statements and how to use them to assess options. We have looked at the obstacles that lay in our path.

    Now we are going to start to look at YOUR business, specifically.

    Why your business is like a chain

    Within the Theory of Constraints body of work that was developed originating with Eli Goldratt, there is a commonly used metaphor for a business that is referred to as the ‘Chain Analogy’. We are going to use that metaphor to help get started.

    Think of your business as a series of operations and activities that each form one link in a chain. The work flows from one link into the next where it is processed, and then ultimately, once the work has progressed through all of the links, it is delivered to the customer and the cash flows back to your company. In a simple form the work may start out with marketing activities that generate an enquiry, that leads to a quote, a sale, then an order, moves into production, despatch, invoicing, and finally to receivables.

    The financial performance of our business is like the load capacity of our chain. The stronger the chain, the stronger the business. What do we all know about chains? When you increase the load on a chain, any chain, the chain is going to break down at the weakest link.

    How to focus your efforts for the fastest and most profitable improvements

    As managers we are always being asked to improve the business, so that is what we work on. However, often we are responsible for only a small section of the business, one link in the chain, so that is where we focus our improvement efforts.

    Think about our chain again. If we are working on improving a part of the chain that is not the weakest link, we are not going to strengthen the chain as a whole, therefore we will not see great improvement in the overall performance of the business. Investment projects are notorious for under-delivering on paybacks to the overall company bottom line. We show performance improvements in our local areas, but the overall company bottom line does NOT change in a breakthrough fashion.

    The invalid assumption we make is that improving performance locally results in improving performance in the global system. Investing to improve performance in anywhere but the weakest link in the chain will not result in the best possible return on investment for your business.

    It is a waste of money, and indicative of a poor understanding of what drives cash flow, for any company to undertake a ‘company-wide’ improvement program. Why would you strengthen all of the links in the chain when it is only the improvement activities on the weakest link that will deliver a solid return on investment?

    To achieve the speed and magnitude of results that are required in the rapidly changing and increasingly demanding world of 21st century business, we focus our attention on the weakest link and lift its strength as quickly as we can.

    So, where is it, and what do we do when we find it?

    The five focusing steps to improvement in any environment

    The five focusing steps was also developed as part of the Theory of Constraints. It is a simple and rapid to use tool to begin to help you and your team work out how to begin improving your business.

    Step one: Identify

    Here we identify where in the system the flow of money is being blocked up.

    Remember, here the chain analogy that encourages you to think of the business as the entire system is broken up into departments or processes (links). Some common bottleneck examples include:

     – A certain machine within a factory.

     – A process that produces less output than the rest of the system, e.g. marketing can be a constraint on the money flow of the business if there are insufficient leads flowing into the sales process.

     – Policies, e.g. batch sizes in shipping or processing that mean we overproduce some products while being out of stock of products that could be sold immediately.

    Some clues to help you find this bottleneck is to look for the most heavily loaded resource, look for where stock piles up, or what piece of equipment everyone is terrified of breaking? It could be a supplier, a skill set, or just about anything.

    This not a process that should be buried in weeks of data analysis, it is an intuitive perspective of the group of people who work on the business (chain) you are looking to improve.

    Step two: Maximise

    In the original TOC (Theory of Constraints) literature, the stage is called ‘Exploit’. I find that this term has too many negative connotations attached to it and it tends to alienate people with whom we are trying to work to implement the concepts. I do want to be faithful to the original material, however.

    In ‘Maximise’ we look to change the way you run the constraint so as to maximise its output. This may include some of the following ideas that we have used with clients when a machine has been the constraint:

     – Run it through meal and shift breaks.

     – Speed up cycle times.

     – Make sure the operator never has to leave the machine causing it to stop.

     – More endurance. More performance.

     – Shorten setup times.

     – Ensure the raw materials are always present.

     – Ensure all information needed by the operator is provided, and is clear.

    Stand by the constraint activity and watch. Look for anything that reduces the output.

    Standing by the constraint activity and watching is not a five-minute activity. This activity is described by former Toyota chairman Fujio Cho as “Go see, ask why, show respect.” We want to station ourselves at the constraint, see what is happening, ask why things are being done in that way, and show respect to the human beings that are conducting the activity. We will need to spend hours, possibly a few days to truly understand all of the issues that are hurting the constraint.

    Apply whatever continuous improvement tools and resources (Lean Manufacturing, TPM, Six Sigma, or all of them) that you  have onto this process, and ONLY this process. There are 24 hours in a day, this equates to 86,400 seconds. Until all 86,400 of these seconds are used productively to generate throughput you do not have a capacity problem, you have a management problem.

    This is good.

    Management problems can be changed easily, far more easily than technical design failures, or tolerance stack ups, fatigue test failures, and many other more complex ways that a process can fail.

    Step three: Subordinate

    This is the trickiest part of the process. The whole organisation must change its behaviour to support the constraint. What is best for the constraint is the most important thing, and this often means other parts of the organisation may have to wait, share or give up resources, change operating policies, etc.

    For example, they might have to:

     – Make more regular and special deliveries to ensure that the constraint never runs out of material.

     – Buy more expensive and higher quality tools to reduce breakages.

     – Modify forms and paperwork so they are easier and faster for a constraintoperator to complete.

     – Increase maintenance focus on this machine to reduce downtime.

     – Purchase a more expensive raw material in order to improve yield.

    In the initial enthusiasm, we will subordinate; maintaining this change in organisational priorities is tricky and requires constant monitoring. They say ‘Old habits die hard’ for a reason. This reversion to old behaviours, old organisational policies or structures and move away from the subordination to the constraint is the most common reason I have encountered for an organisation to experience deterioration in the rapid improvements that have been achieved. Many of our clients experience this problem (even if we have warned them). They have their learning experience, and then restore the old behaviours and see the performance improvement disappear. This is the hidden killer of organisational change.

    Part of subordination is to examine what you should stop doing. Very simply, you stop undertaking any improvement activity, or any activity on a non-constraint, that can be stopped. Redeploy any of this capacity that can usefully be used by the constraint. Eliminate the distraction of anything that does not relate to supporting the constraint and can be stopped without hurting the business. Stop them all. Now!

    Step four: Elevate

    If after having first sweated out all the capacity you can, by genuinely following Steps One to Three, you still need more capacity, you can further elevate it by finding another machine, person, whatever it takes as long as any increase in investment or expense is less than the income generated by the throughput.

    Step four is where investing in equipment and software can add value to increase capacity at the constraint. Investing in software, equipment, people, training is a waste of time and money on a non-constraint as the throughput of the system does not increase. Investing in the constraint before you have implemented the first three steps will probably give you an improvement in throughput but at greater cost than was necessary.

    Step five: Don’t let inertia set in

    Often steps one to three are sufficient to break the constraint and achieve a breakthrough in performance. To develop and then maintain a sustainable competitive advantage, an organisation must always be looking to improve. Go back to step one and repeat the cycle.

    Life is better, memories of the bad times fade, the wounds heal somewhat and we can fall victim to the enemy of great human progress, contentment.

    The leadership of a company should celebrate the changes, regather the teams, and then define a new compelling future to move to. Contentment will lead to complacency and then decay. A leader who is never happy because that is a proxy emotion for contentment may drive towards great heights but will not have much fun along the way, nor will their people. The paradox for a leader is to be simultaneously discontented with the status quo and happy with the progress made thus far.

    Comments are welcome.

    If you would like to order the book “Manufacturing Money” click here for details.

    Have and Awesome Day

    Jason


    0 comments.

    What’s Next?: Changes Business Owners and Managers Can Make On Their Way Up To Being A Black Belt


    IN THE PREVIOUS INSTALMENT OF OUR RECENT BOOK ‘MANUFACTURING MONEY’, WE EXPLAINED HOW TO MAXIMISE ROI. IN THIS INSTALMENT, WE DESCRIBE SOME CHANGES BUSINESS OWNERS AND MANAGERS CAN MAKE ON THEIR WAY UP TO BEING A ‘BLACK BELT’ IN A MANUFACTURING AND DISTRIBUTION BUSINESS

    Before any changes occur inside any of our clients’ businesses, we collaborate with them to understand the financial impact in as much detail as possible before we begin.

    This is done for two reasons.

    1. We want to have a live ‘Measure of Success’ so that we can have very fast feedback as to the results of our actions. If you are doing any sort of improvement project that is unable to rapidly show an improvement (days, or a few weeks) in the financial performance of the business, then I have to say that it may be the wrong program for your company, or it is not being executed correctly. The ‘Measures of Success’ will help you confirm this along the journey. Long gone are the days where you could undertake a two-year program of ‘Cultural Change’ and accept that there will be no financial benefit for at least eighteen months.

    2. Before beginning, you really should determine if the desired changes are actually worth the effort. If the changes you wish to make are only going to have a marginal impact on the financial performance of the business, then why bother? It is extremely good business to sit down and ‘war-game’ the impact of the changes before you start.

    We will now ‘War Game’ some scenarios.

    Scenario One: Stock reduction, how it is often done

    Stock reduction is a great way of rapidly lifting your return on investment. It is often done; I have done it many times in the past, and will do so again in the future. However, a word of caution: reducing stock in isolation of other business processes can have disastrous financial impact and even larger impacts on other areas of the business.

    This is a not uncommon scenario. I have been through similar scenarios, and you many have also.

    YourCo corporate head office has decreed an immediate 50% drop in all stock levels. The CFO has been monitoring the stock levels and from the balance sheet they can see there is $100k being held in stock. They wish to free up $50k of this value. Purchasing is instructed to restrict raw materials purchases. The operations are told that they must still supply all of the orders. Sales are often kept unaware of the decision as it really is an operational issue.

    There are no changes to the way operations process the orders, or the materials, everyone is told to work harder and get better.

    In the beginning there is no real difference, some of the operations slow down or are idled to allow the stock to be consumed. Labour levels are not changed as the rate of production is expected to return to normal once the stock levels are reduced. Other overheads do not change, nor does freight. The time it takes for an order to move from the beginning of the process through to the warehouse for despatch is unchanged.

    The first sign of a problem is that customers who are used to ordering from the finished goods stock, place an order and instead of the warehouse being able to despatch the order immediately, they have to wait for stock from production. This means that the lead time from order to delivery has increased. The protective buffer of finished goods stock has been reduced, as was the intent, and now the customers will receive goods only once their order has been processed.

    Customers who have been used to receiving product within the normal lead times start to complain. They will ring their sales representative who may well be unaware of any changes. The noise from the sales rep makes its way up the chain, and then back down again to the production manager. The production manager says that they need to purchase more raw materials in order to refill the stock levels.

    Customers are unhappy and vocal. Sales are irate as they cannot book a sale without an invoice, and you cannot create an invoice without stock. Production is being kicked everywhere. Sales have been missed; the company has been unable to invoice $50,000 in sales due to the inability to supply.

    Figure 1. Financial Statements - before stock reduction.

    Figure 1. Financial Statements – before stock reduction.

    Figure 2. Financial Statements - after stock reduction.

    Figure 2. Financial Statements – after stock reduction.

    Let’s now have a look at set of financial statements for a new company called Example Co. to see the impact of the stock reduction. You can see by comparing Figure 1. And Figure 2. that net profit before tax has reduced, cash flow has reduced, sales have reduced, return on sales has reduced, ROI has reduced, and standard product cost/unit has increased.

    This was not the intent of the exercise.

    Without a change in the fundamental process by which production occurs, the stock level cannot be maintained at this low level and have high customer service levels as before.

    Decisions will be made, either stock level will return to previous levels, or customer service levels will be allowed to decline – no one is happy. Customers will look at alternatives and the production manager has a miserable life; at the next operations review, they will be castigated for the low service levels and the increased costs.

    Stock reduction that drives greater customer service and improved profitability, while simultaneously reducing costs, can be achieved.

    Scenario Two: Stock reduction, the right way

    YourCo seeks to improve its return on investment by reducing the cash held in stock. The company is exceptionally focused that this change must not have any negative impact on its customers. In order to have a lower level of cash tied up in the order to delivery process without hurting the customers the speed of the order to delivery process must increase.

    Figure 3. Financial Statements - after stock reduction, the right way.

    Figure 3. Financial Statements – after stock reduction, the right way.

    The financial statements are above.

    You can again see the reduction of the raw materials purchasing, and the drop in stock. As you can see the financial metrics all improved, cash flow improved.

    The key driver of this was that the changes were implemented without reducing the sales. Hurting sales is absolutely unacceptable.

    Scenario Three: Buying new equipment

    A common scenario is that a business is making a decision involving the purchase of new equipment. The motivation for buying new equipment can be many. Reducing costs, improving efficiencies, and opening new market opportunities are amongst the most common reasons.

    Should you buy the new piece of equipment?

    The only sensible answer is “it all depends”.

    We should make sure we model the impact of the new piece of equipment through the financials and make the decision that way. It is far too tempting (I have seen it happen) to have a rush of blood to the chequebook during a machinery exhibition or over a very nice dinner and a few bottles of red.

    Figure 4. Buying new equipment.

    Figure 4. Buying new equipment.

    In this scenario, we will build on the original model (Figure 1. Before stock reduction). A piece of equipment will cost $50k that is paid in cash, there is expected to be a $10k reduction in labour costs, and a scrap reduction that means we can reduce our raw material purchases by 5% or $20k.

    As you can see in Figure 4., in the first year the financial performance deteriorates. This is not surprising, really, as the cash outflow ($50k) is greater than the savings. In this case I would be very dubious about buying the equipment; cash flow is reduced, net assets increase. The longer-term cash flow benefits of the equipment may however outweigh the initial negative cash flow impact and this will have to be assessed carefully on a case-by-case basis.

    We have walked through the three financial statements, constructed them for a fictional company and calculated some measures of financial performance that look at the global performance of a business. You can now basically perform simple ‘what if’ analysis on the financial impact of the strategies and actions they wish to undertake, ideally before financial commitments are made.

    The financial statements are most  effective when utilised as ‘global’ measures. That is, they look at the entirety of a business operation. This is what shareholders care about, it is what CEO and CFO care about. This global perspective is caught in an apparent conflict with the desire of the same CEO’s and CFO’s desire for control at a detailed business unit, even individual level. We wish to be able to monitor, control, and judge the performance of individuals so as to drive performance even higher. This desire to measure at a very detailed level leads to another whole suite of detailed measures being created and utilised to give us the feeling of being in control at a detailed level and of providing for us a simple and clear way to assess individual performance.

    The whole thing is an illusion. The premise is false.

    The premise is that by measuring small, detailed performance in all areas, and improving those local measurements in each area we will achieve an improvement in the global performance of the  enterprise. This is such an erroneous perspective that it is worthy of its own special edition program of ‘Mythbusters’.

    Here are examples of the measures I am talking about.

    – Sales margin.

    – Efficiency.

    – Purchase price of components & products.

    – Just about any form of standard cost accounting.

    – Almost anything to do with transfer pricing.

    Making operational decisions using these measures in isolation from the global financial statements is incredibly risky and almost certain to cause the enterprise to lose money, more often than not.

    Linking bonus payment to achieving specified levels for these individual measures in isolation from each other and the global performance of the business is a recipe for civil war.

    The types of decisions that I have seen made using these localised, specific measures include the following, to:

    – Accept an order from a customer.

    – Reject an order from a customer.

    – Make vs to buy analysis.

    – Change component sourcing practices.

    – Open/close a factory.

    – Invest in new equipment.

    – Invest in new products.

    – Invest in product ‘A’ instead of product ‘B’.

    – Hire or retrench people.

    I have seen these decisions made correctly and executed well so that the business makes more operating cash flow and the enterprise value is increased.

    I have seen these same decisions made based upon the impact of a single isolated measure and literally waste millions of dollars of shareholder value and precious management capacity.

    Here are some examples of how this behaviour plays out, I am sure you can relate to some or all of them.

    1. Sales margin

    Sales Director: I need to achieve 25% margin on this product or I will buy it from an outside supplier, not from our factory. My bonus is paid on my margin numbers and I cannot lift prices, so you have to drop your transfer price.

    Plant Manager: If you buy elsewhere I will reduce my costs but not all of the overhead will be eliminated from the business, the burden on all products will increase, and that means the transfer price on all other products will go up reducing your margin even further.

    2. Efficiency

    Plant Manager: I am measured by my plant efficiency and my cost per unit of production. We need to make and sell more of the high volume products and drop the niche, low volume complex variants.

    Sales Director: Are you nuts? The margin on the low volume niche products are double the standard product and the selling price is massive. We need the variety in order to give a range of options to the distributors and the clients. I cannot hit my targets if we only make the high-volume variants. We will lose sales.

     3. Change component supplier

    Purchasing Manager: I am measured on the total purchase price per unit and I can resource this part from our current supplier to a new supplier I just visited saving 3 cents a unit, or $60,000 a year.

    Supply Chain Manager: I am measured on the total value of stock and this re-sourcing means I have to add $100,000 to my stock holding when I am required to reduce my total value in stock by 5% this year. I also do not know if this supplier is reliable and if we run out of this part the air freight cost will kill my budget.

    Plant Manager: Your last ‘cost saving’ re-sourcing caused me to run out of parts and I couldn’t  produce that particular variant for 2 weeks. I am measured by plant uptime and product availability and you killed me.

    I can go on and on. I am certain that you can relate to some – or all – of these scenarios and probably add some examples of your own.

    All of these problems and conflicts waste time, money, management capacity, and have the potential to annoy the market.

    Who needs to worry about competitors when we are being so self-destructive?

    These conflicts are between well-intentioned people who want the business to succeed and to have success in their personal careers.

    The measures for their personal success are flawed and causes them to take actions that compromise the business performance in other local areas, and overall. This is not their fault. These people have different goalposts that they are being required to aim at.

    How can any group of individuals who are aiming at different goalposts possibly work together as a team?

    How much of an improvement could we make to our business if our behaviours were aligned instead of in conflict?

    Solving the measurement paradox

    How do we have people align behaviour to the global improvement of the business? The solution is simple, however, simple isn’t always easy to implement and it will require managers and leaders to have higher-quality holistic discussions around the impact on globally based measurements. Some will make it, some won’t. The ideal solution will at least have the following characteristics:

    – Drive enterprise value upwards.

    – Align behaviours to focus on the agreed common goals.

    – Cause individuals to collaborate for personal gain as well as the organisation.

    – Provide individuals with a viable path for personal success.

    – Promote and permit accountability for behaviour and performance.

    – Reduce poor decision making.

     

    Comments are welcome

    Have an Awesome Day

    Jason


    0 comments.

    Rapid Revenue Growth


    “Doubling revenue in 4 years”

    How Business Leaders achieve rapid revenue growth by adopting Customer-centric Business Models

    Q: “What makes a good manager?”

    A: “I prefer the term Business Leader.”

          Jack Welsh, CEO, General Electric Corporation

    All Business Leaders face fierce competition in the highly competitive mature market and the task of differentiating Products and Services from competitors, many of which are well established successful firms with good reputations with customers, is possibly the most difficult challenge.

    We have observed a strategic shift by leading firms to become more innovative and customer – centric in meeting their customer’s needs. The driver appears to be recognition that customer expectations and freedom of choice demands new ideas and methods of meeting their needs.

    Adoption of a Customer-centric Business Model starts with developing cost-effective solutions to identified customer problems:

    Firstly, understand the customer’s overall business objectives and how you can assist the customer achieve those objectives.

     Secondly, design customized solutions in cooperation with the customer that add agreed value for the customer and are congruent with the firm’s capability

     Thirdly, assist the customer in implementing the solution to realize the benefits.

    Picture1

     

     

    Innovation is the Ultimate Strategic Advantage

    Successful Innovations become embedded IP in Products and Services and are hard to replicate by competitors.

    There are fundamentally two types of innovations:

    1. Product Innovations; new or improved products designed to create High Value.

    2. Process Innovations; new or improved processes designed to deliver High Value.

    Where Value is perceived by the Customer as Functionality / Cost

    Process Innovation has become a prime area of competitive differentiation as firms develop new ideas and methods for:

    • Business Models                                         – the way of doing business
    • Collaboration and Alliances                         – leveraging the strength of business relationships
    • Client-centric Business Processes              – differentiating the customer experience
    • Product and Service Design and Delivery   – delivering value for money

     

    Rapidly Amplifying What Works

    20 per cent revenue growth per annum compounds to double revenue in four years as demonstrated in the accompanying client testimonial Click here to view

    Have and awesome day!

    Jason


    0 comments.

    Maximising Cash Flow for More Efficiency


    At a high level, business is about the efficient conversion of capital into products or services that meet a need and then the conversion of those products or services back into capital (just a larger amount!).

    All of this is not just for today, but also for sustainably into the future. The parable of the goose that lays the golden egg sums this up beautifully.

    Breaking things down to an operating level, our goal of maximizing flow has three aspects to its achievement:

    1. Generate the Maximum Return

    When we look at how much cash is generated by the enterprise (not earnings, cash) and divide that by the cash tied up in assets and stock we receive a return on investment (ROI) percentage. We want to maximise this ROI percentage.

    2. Maximise the Speed of Cash Flowing Into Your Business

    Maximise the flow of cash by minimising the lead time from the purchase of raw materials and labour to the receipt of cash from the client. This is a key driver for the efficient utilization of cash and for improved customer service levels.

    3. Maximise your business Viability.

    All enterprise involves risk. Plan on how to manage the up and downsides of the scenario you are planning on. How can you still have a viable business if the worst case comes true?

    Looking at your daily activities so as to maximise flow will result in improved customer service and greater commercial returns. Your costs reduce as the waste (which usually blocks flow) starts to disappear.

    Comments are welcome!

    Have and awesome day!

    Jason


    0 comments.

    DIFOT of 100% is a normal occurrence


    Welcome to our next installment of our Current Client Result Series. A short series of results from current clients that we are showcasing once a week over the next few weeks.

    Today we hear from Leon Joyce. Leon is the Director of Larnec Doors in Swan Hill NSW

    Are these the kind of results you have been looking for?

    “Before we started working with Jason we had a lot of late orders and many customers ringing us up to see what the ETA was for their job. The phones rang continually. I didn’t believe that DIFOT (Delivery In Full On Time) of 100% was possible.

    Now customers do not have to chase their orders and DIFOT of 100% is a normal occurrence. We can be proactive rather than reactive about the business and focus on what is coming up in the future instead of just looking at today.

    I come into the office, get a coffee, and walk two laps of the factory without anyone running up to me with an emergency. I now do the job I am paid to do. This is a fantastic feeling for me and for the team.

    We worked with Jason as a sounding board; Drawing on his experience in many industries to assist solving our problems has been great, he would either confirm we were on the right track or suggest other approaches that would achieve the desired outcome we were after more effectively. “

    Leon Joyce – Director, Larnec Doors, Swan Hill NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

     

    Jason


    0 comments.

    Coldplay and the Joy of Work


    Just prior to Christmas the family and I travelled to Sydney to see the last concert of Coldplay’s world tour. The concert was fantastic, the fireworks were great, everyone in the audience was given a glowing wristband that changed colour in time with the music, it was a thoroughly enjoyable night.

    The video screens showed close ups of Chris Martin (lead singer) during the performance and you could see that he was absolutely enraptured by what he was doing. He was so in the moment and enjoying the whole occasion and this came through in the performance.

    Staging a stadium concert like this is a huge undertaking, with security, logistics, equipment set up and testing (there were 8 wifi networks in operation,according to my phone) and I am certain that the band does not play a part in all of it. In the lead up to the event I am sure there are parts of the process and management that the band dislike but know are essential.

    Here is what I took from this.
    1. What are the parts of the business I dislike, but know are essential? – Delegate, over see, and automate
    2. What parts of the business are joy? – Spend as much time here as I can
    3. The other parts? – Just stop!

    What does this look like for you?

    Comments are welcome

    Jason


    0 comments.

    Financially We Are Back In Control


    Today we hear from Paul Goard – Brumby Aircraft Australia, Cowra NSW

    Are these the kind of results you have been looking for?

    “When we metBrumby testimonial  Raving Fans Jason our business had no marketing approach and we ran from week to week managing cash flow.

    We worked with Jason to develop a low cost marketing plan that (along with making a great plane) has resulted in a solid pipeline of orders for our Brumby 610 aircraft for the next 4-5 months.

    When this happened we realised that we did not have a system that allowed us to manage the aircraft production as well as the other jobs that were coming into the workshop. The workshop was cramped, jobs were taking way too long and we could not confidently tell a customer when they would see their plane completed. Jason then worked with us to put in place a production system that (within 2 weeks) has significantly improved productivity of the workforce and given us transparency of where every job is at.

    The peace of mind this gives us has been fantastic. The reduction in stress and confusion amongst everyone has been massive.

    Financially we are back in control and I can spend time growing the business knowing that the workshop is running smoothly.”

    Paul Goard – Brumby Aircraft Australia, Cowra NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


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    Collaboration to Win Higher Value Business


    How Strategic Business Alliances assist SME Member Firms to Win Larger Contracts than as Individual Firms

    Successful Alliances leverage the integrated capacity of member firms to create competitive advantage to win larger contracts especially where the alliance reinforces a vertical industry focus. Potential Strategic Alliance Arrangements span from Collaborative Design and Development, Network Marketing and Bid Alliances through to Joint Ventures.

    Alliances can secure larger contracts by collaboration rather than organic growth. Most importantly, each member firm becomes a channel to market for other members of the alliance. Network marketing can establish ‘brand recognition’ to successfully position the alliance in the target market.

    Alliances also offer an effective business risk management solution in turbulent market environments. In the resources investment boom many engineering and construction firms aggressively pursued organic growth. In the subsequent investment downturn the firms had to lay off staff and close facilities to survive.

    Business Alliances enable the seamless operation of business processes across value chains to best apply competence of member firms for mutual gain.

    Contents:

    1. Central Tenet

    2. Critical Success Factors

    3. Strong Case for Strategic Business Alliances

    1. Central Tenet

    Strategic Business Alliances are now a central tenet of many companies growth strategy and is based on realising the benefits of unlocking trapped value through collaboration.

    Alliances represent a strategic shift from contractual based relationships to collaborative relationships. The adversarial nature of contractual relationships leads to non-added value activities. Successful alliances eradicate non-added value activities through the benefits of collaboration.

    Alliances had their genesis in the partnership sourcing approaches developed within the Japanese company families – the keiretsu – in the 1960’s and 1970’s, which tried and tested many of the management tools now used by all the major industries of the world over. In fact many commentators place their partnership approaches as the single greatest factor which gave the Japanese automotive industry their unprecedented success in the 1980’s and early 1990’s.

    The Japanese success was to eradicate non-value adding activities which result in the destruction of value in the adversarial interface between firms. The substantial benefits of alliances can be found in their ability to deliver superior value for the participants.

    A useful definition is: Alliances enable the seamless operation of business processes to best apply competence of member firms for mutual gain.

    Alliances between oil and gas producers (BG and BP), major contractors (Halliburton Brown and Root, Global Marine Integrated Services, Kvaerner and Schlumberger) and advisory firms including Bywater plc [1] were credited with achieving step changes in sustainable performance for the North Sea oil industry.

    The best way to think about alliancing as opposed to contracting is to consider their core roles:

    – Contract: Managed for cost

    – Alliance: Managed for value

    Contracted services tend to be tactical in nature, of low complexity, with a clear scope of works, for which there are many competitive suppliers. Alliances, on the other hand, are those where the supplier has a direct impact on the strategic priorities of the principals business, and where mutual trust and knowledge required by the supplier to add real value to the principal cannot be replaced easily.

    Successful alliances must be driven by business leaders from each organisation.

    2. Critical Success Factors

    Experience in the North Sea oil industry suggests that successful alliances begin with a clear business need for all parties, that a set of shared goals and shared values must be agreed upon, that an integrated planning process is employed, all of which is underpinned by a common measures model.

    A clear business need answers the question “why am I doing this?” For example:

    – Need to win larger contracts

    – Need to deliver complex projects on tight timelines

    – Need to effectively manage uncertainty

    – Need to dramatically reduce cost

    – Need to effectively manage risk

    – Need to Maximise return on investment

    – Need to Access scarce resources

    – Need to Access technical expertise

    The other question to ask is “Am I ready, and are they?” by examining essential prerequisites for business alliances to succeed.

    Business Alliance Prerequisites

    If these prerequisites are met you can say with conviction “Yes I understand why I am going this, and yes, I know what I am taking on.”

    Shared Goals and Shared Values must be agreed upon at the outset.

    The single most important test of the shared goals is that they fully align back to the goals of the individual organisation.

    Shared values is a topic that all too often go into the ‘too hard basket’ and yet a cultural mismatch is probably the greatest reason why alliances do not deliver the value they should. Alliancing is about shared pain to deliver shared gain. So before the pain starts, a foundation of shared values is needed.

    The difficulty of marrying two corporate cultures should not be under-estimated. After all, if an entrepreneurial firm is trying to Tango with a hierarchical firm doing the Foxtrot, it is good to know that upfront.

    Integrated Planning is the task of saying how you will reach the shared goals and has two key elements:

    – Known problems ( Incremental Change)

    – Unconstrained Opportunities ( Step – Changes)

    Unconstrained opportunities can be where R&D of the two firms is merged together. Or where both parties collaborate to jointly address Business Risk and Opportunity Management for a complex project. Or where both parties form a dedicated project office with a one team culture.

    What is important about the planning process is that it is done openly, jointly, and that known problems are discussed separately to unconstrained opportunities. If not, the debate quickly reverts to the known, rather than searching for the greater potential which is the unknown.

    The Common Measures Model measures progress towards the shared goals. Consider a topside alliance in the oil industry. Its shared goal is to maximum production (topside efficiency) for minimum operating cost. That’s it. The operator of the platform may have many other considerations. And they have the whole asset to think about, not just topside. But for the alliance it is those two strategic measures that matter.

    3. Strong Case for Strategic Business Alliances

    There is a strong case for Strategic Business Alliances to unlock trapped value. Alliances can span from the pre-feasibility phase into realisation of complex projects which unlock significant value for participants.

    About the Author

    Bede Boyle is Chairman of Manufacturship Group formed by Jason Furness to assist business owners and leaders boost profits in Manufacturing by simultaneously ramping up revenue and driving down costs.

    Jason was Manufacturing Manager with GM Holden, National Manufacturing Manager with Smorgan Steel Group and General Manager of Electrolux Orange Plant where he rapidly boosted Return on Sales despite the GFC.

    Bede was Chairman of Bywater McLean Pty Ltd and has drawn on Bywater plc [1] experience in the North Sea oilfield to develop his strategic thinking for this article.

    Bede can be contacted by

    phone +61 [0] 419 213 010

    email   bede@manufacturship.com

     

    Comments are welcome

    Have a great day

    Jason

     


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    Understanding our financials, growing our business


    Today we hear from Warren & Jane Lefbvre – CEO’s, WRL Engineering Pty Ltd, Warren NSW

    Are these the kind of results you have been looking for?

    WRL Engineering “Working with Jason helped us to understand our financials in a way we have never done in our 18 years in business.

    We now know where we need to focus our efforts and we have a system to allow us to see our future workload so we know where we are going.

    We have improved our Marketing materials and process with a lot more people knowing who we are and what we do.

    We are now really proud of the information we send out about our engineering services.

    We have plenty more work to do and working with Jason has us started on growing our business and our financial rewards.”

    Warren & Jane Lefbvre – CEO’s, WRL Engineering Pty Ltd, Warren NSW

    If you or someone you know wants these kinds of results in your business call me on 0488 337 666 for a chat about how we can help.

    If you would like to read more about real life results that can be achieved in your business, click here

    I look forward to speaking with you.

    Jason


    0 comments.
     
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