Tweet

Policy

Written by: Jack Greene

Article Overview: Productivity can be improved anywhere, including the board room. Basic policies set in place the mechanisms that control costs up and down the P&L and balance sheet. Be sure those policies serve the organization, and not vice versa.

Policy

Policy

Productivity can be improved anywhere, including the board room.

Basic policies set in place the mechanisms that control costs up and down the P&L and balance sheet. Be sure those policies serve the organization, and not vice versa.

Any cost item is a part of an organization's productivity picture. The person responsible for the cost is usually considered to be responsible for the cost and the variance it produces. But actual cost is only a result of some policy, which may be officially set at a level well up the chain of command; or it may be just a practice set in place by custom ("we've always done it that way"). Following are some examples of policy with a direct, but not always obvious, effect. Do these relate to your productivity?

1. Start production without all parts

The vendor hasn't delivered yet, or the parts are in inspection, or on hold. But policy or practice is to start production anyway; the parts will come in, or they will pass inspection, or we'll inspect quality into them.

You have just removed responsibility from someone who did not perform, and placed it on someone else. Is it the sales forecast; or purchasing system or performance; or poor vendor output or quality; inspection performance or specs or workload management? Any or some combination, or another issue altogether.

The point is that the policy removes attention from the problem, where it might contribute to the solution. Now the focus is on the process, where some but not all materials are on the way down the line, to be held up later because not everything is there to complete the job. So the order goes on the sidetrack, and a machine has to be re-set up twice, and parts retrofit, damaged in re-handling, done on overtime,. And the order is at least as late as it would have been otherwise. Oh yes, you might get lucky and everything works out, or some heroic effort saves the day but that is no way to manage. Change the policy.

2. Lack of a frozen schedule production for the near future

If production schedules are changed, up until the time of issuing parts, there will be inefficiency in operations without doubt. There will be unnecessary changeovers and therefore lost time and lost production. Longer and more efficient runs will be less frequent. Vendors will be subject to frequent schedule change and shorter runs, often at your cost. Overtime will become the normal technique to catch up.

Your operation may operate most smoothly with a week frozen schedule, or two weeks or a month, depending on in-house and supply chain variables. Find out what that lowest cost configuration is and legislate that into policy.

3. Quality standards and specifications

Consider what your organization produces, and how it specifies the attributes of materials and products. Do you produce thumb tacks and have a set of pharmaceutical quality specs? Two major factors tend to dictate which specs are appropriate; a regulatory body, and what the customer will pay for. If you produce medicines, or military parts, the specs will be imposed for you to meet. But if you can essentially set your own specs, consider your reputation in the market, what the customer wants and will pay for, and internal costs.

Is your product considered a commodity by the market? Is it possible that by adding features, or specs, or real quality, you can become a premium supplier, able to command a higher sales price?

4. New product introduction

Preparing new products for the market can be a long, expensive process at best. And products may fail because of marketplace acceptance. A good introduction system will have these characteristics: transparency among the several groups involved; as compact a time line as possible; an ability for each of the stakeholders to have an un-coerced say; the ability to recognize reality. Often you will have to estimate time and ability to perform tasks without much history to go by, so recognize that as an exposure; compensate by developing timelines based on clear, reasonable and agreed assumptions. Please avoid the temptation to legislate results.

5. Revision level

In the documentation that support the product and process, there will be a set of policies that state when revisions are required, how often, what justification is required, and who can authorize them. Such policies don't often make it to the board room for review. But they are important because spec changes will always cost money to implement, and may or may not save production cost.

Also rev levels may determine how parts fit together, or interrelate, with existing products or against an industry standard. This relationship is very important and is worthy of the highest visibility.

If your organization has many changes, and some industries do, consider signing parties to accelerate the physical approval process; otherwise weeks may go by as proposed changes are discussed. Once a week, get together those authorized to sign off for different disciplines in one room, hash out the differences, get the signatures or a commitment to check out a point then sign or reject.

6. The one best way, or ad lib

Is an employee required to perform a task one particular way, or allowed to ad lib? In some industries, pharmaceuticals for instance, there is only one way. Period. A non-standard method may lead to a fatal problem.

How about making thumbtacks, or ad spots, or sales calls? Uniformity is valuable there too, for practical or financial rather than life threatening reasons.

Your organization may have invested to develop a process that will produce the greatest efficiency, or success rate, or quality level, or customer service, or acceptance. You may ask a trainee to use the method that produces best results. If the trainee uses another method and does poorly, you will want to require the approved method to be used.

7. There's always a better way.

Even though you require employees to use the one best (approved) way, allow for continual improvement by having a formal system to encourage innovation, and to approve a replacement for the one best way.

Thanks for your attention; I'm happy to add to your perspective of industrial engineering and productivity.

Jack Greene Jackson Productivity Research Inc.

Related Articles
  Auto Insurance Companies - How To Cancel A Policy
  Monetary Police is Science, Everything Else is Stamp-Collecting
  Your Health Insurance Policy
  Governing your Corporate Website
  Letters That Dazzle

Article Tags: cambria, compatibility, div, endif, family auto, font definitions, gte, mso, o company, pages 1, panose, paragraphs, pitch, signature, style definitions, xml, zoom



Related Forum Posts
Re: How to be green? - Hi Evan It’s a great topic especially when it comes to going green and saving our planet. We all have a role to play and we are happy about the fact that we are into it. We have recently made our workplace greener and in the process the following changes have been implemented – 1. We provide paper invoices only if customers ask for them. Otherwise, all our invoicing is done electronically (a PDF via e-mail). 2. We have replaced the Paper Cups at our Cafeteria with Mugs for not only our in-house requirements but also for our clients. 3. We have also made it a Company policy to use only eco-friendly electronic appliances and that includes bulbs, air conditioners. 4. We are in the process of putting it into the Policy that the Employees will have to take to other transportation media – other than their personal vehicles – on at least a day per week to office. Hope we are on the right track. Regards,
Re: How to be green? - [quote="negotiations":73vujkfd]Hi Evan It’s a great topic especially when it comes to going green and saving our planet. We all have a role to play and we are happy about the fact that we are into it. We have recently made our workplace greener and in the process the following changes have been implemented – 1. We provide paper invoices only if customers ask for them. Otherwise, all our invoicing is done electronically (a PDF via e-mail). 2. We have replaced the Paper Cups at our Cafeteria with Mugs for not only our in-house requirements but also for our clients. 3. We have also made it a Company policy to use only eco-friendly electronic appliances and that includes bulbs, air conditioners. 4. We are in the process of putting it into the Policy that the Employees will have to take to other transportation media – other than their personal vehicles – on at least a day per week to office. Hope we are on the right track. Regards,[/quote:73vujkfd] That is a good start! We also have filled our kitchen with glasses and mugs, and also changed all the bulbs in our office to energy efficient ones. Some people are even going to the extent of putting out solar panel plates outside their window to power computers and other such devices. There's a lot you can do but it all depends on how much money you are willing to put into it.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

10 Reasons Your SBA Loan May Be Declined

The Pure FUN of Learning & Using NLP

Stay Employed In A Down Economy

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.