How to Make Your Small Business More Efficient

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When you run a small business, it is really important that remain as efficient as possible. Times can be really difficult for small start-up business and there is a large number that fail in the first couple of years. This is can be for a number of reasons which include things such as profitability, growth and poor efficiency internally. There are many different things that companies will look at to ensure that they continue to grow and remain efficient. These include things like identifying and managing Key Process Indicators which normally include things such as productivity, cost, quality, people and safety. The specific measures that are selected differ within each company and there is no right or wrong KPI.

One method that some firms look at in order to improve their efficiency is implanting a Kanban system. This concept originated in the 1940s in Japan and was originally focused in the automotive industry although in recent decades this has now expanded to all different types of companies around the globe. Kanban focuses on a pull system and uses the voice of the customer in order to dictate what is being made and when. This sounds really simple however most companies operate in a system where they will make excess inventory in order to ensure the customer always has a part available. This is appropriate for a lot of different business where it may be crucial however this clearly gives a company excess inventory and effectively tied up cash. Excess inventory is generally looked at as a bad thing to be avoided.

Why would a company introduce Kanban?

There are many different reasons that a company would introduce a Kanban system which could include:

  • Efficiency improvement -Clearly if you are only ordering to what the customer needs then this improves efficiency.
  • Reduce inventory -If you have excess inventory then implementing a Kanban system and looking at how you deliver things through this process will help reduce the company inventory.
  • Identify bottlenecks – Generally people use tools such as Value Stream Mapping to identify bottlenecks in a process however the Kanban process can help this also. The visual management of this will let you see at a glance if you have parts or components in a line in any specific operation. When there are bottlenecks in a process then it is important that these are actioned immediately in order to ensure that the customer demand is always made in respect to the timing they are expecting.

What is needed for Kanban?

Implementing a Kanban system is not particularly hard, however there are three main things that are needed in order for it to be successful.

  1. Visual management – there is a need for you to have clear visual management systems in place for all to see the progress of where things are in the value stream. If you invest in a Kanban board online, you’ll find that there are many different variation types to choose from. The simplest is sometimes the most effective. The most common that you will see in the industry is the one where the operational sequence is marked along the top, the customer demand to the right hand side and cards used to show visually where things are launched and where they are in the operational sequence to meet the defined customer demand. The people involved in the manufacturing of this would move the card along when the finished each operation. Placing the board in a key area where everyone can see (and update) is important for all stakeholders.
  2. Good Quality Performance – Before even thinking about implementing Kanban then you need to ensure that you have high quality performance in the operations. If you have poor quality which can include non-conformance, rework or scrap then clearly the Kanban system will not be effective as you are only launching to customer demand (if you scrap an item then another will require to be launched). If you have identified that there is some areas in your business where the quality performance is not quite right then it is important that you take corrective actions to resolve this before implementing the Kanban system. There are many different ways you can do this but one of the most common is to appoint a DMAIC project to the topic with a good problem definition and what you are trying to achieve. If you do not have the internal skillset to do this, you can hire someone temporarily.
  3. Company buy in – All stakeholders to initiatives like this are crucial to buy into Kanban. Specifically with a start up business, the buy in should not be difficult (as they will not have already got into a certain way of working) however if there is any resistance, it is important this is fixed before implementation.