Profit-Ability & Profitability
Profit-Ability Improvement: An Overview
The ability to produce profit is a skill. As an organizational skill---ERP, Enterprise Requirements Planning provides a philosophy of relationship, a closed-loop "what if..." projection simulator and company-wide communication system that can be used to make and keep promises on a grand scale. This organizational skill, properly implemented and managed, becomes organizational integrity. It makes it possible for 2000 employees to have daily work schedules that are valid--assuring that each employees action can contribute to the overall profitability of the organization.
An invaluable set of tools for defining each individual work assignment and related sub-systems is Process Design & Process Reengineering. Clearly defined interrelated business/work processes not only make profitability possible--it also makes managing change possible. Managing change is essential to profitability, survival and morale. The ability to make a promise and keep it requires a clear understanding of all related processes and the cause & effect of changes that can occur in those valid daily work schedules derived from ERP.
We view Profit-Ability as a fundamental skill. Knowing how to liberate, measure and reward the innovative talent of every employee in your workforce, we believe, is a fundamental key to achieving and maintaining long-term success. Profit-Ability & Empowerment are essential if success is the goal of your business. You need employees who fully embrace the responsibility of their daily work schedules and locally manage those detailed changes in demand that invariably arise each day.
Properly defined, easy to use, and easy to update documentation is essential as a communication tool and as a change implementation tool. Without it company-wide accountability is nearly impossible. We have developed ESM™, Employee Self-Management as both a system and philosophy that allows every employee to correctly improve and evaluate the profitability of their actions, i.e., their skills, habits, and day-to-day strategies for making and keeping their promises. This is the individual's local ERP system that we use to liberate, measure and reward the innovative talent of the individual. Performance Measures, Team Development and Training are tools we use to make the success of ESM™ and other Profit-Ability Improvement Strategies possible.
Transition Management: Crisis Intervention (We Can Help...)
Typically we provide contract services to companies that are expanding or in start-up. With today's economic uncertainties we are seeing an increase in the number of companies engaged in proactive strategies for downsizing and improved utilization of existing employee populations. The same tools and strategies are required. Getting new jobs and processes properly defined and integrated into an existing environment, or looking for ways to combine existing job functions and go through all of the issues related to staff reduction can be very challenging. Introducing a new incentive plan and making the right cuts can actually bolster profitability if it is done correctly at the right time.
Knowing what remedies to choose for a given set of symptoms can be a very risky business. Philosophies of improvement in business, in life, and in relationships are available now, in the “information age,” in prolific and overwhelming abundance. A wrong choice can end your career or end a company, a product line, a source of funding, or a partnership—at home or at work.
The task of applying remedies to one’s circumstances is an art at the very least. When the remedies are for company-wide problems like cash flow, or startup costs, phase-out costs, marketing strategies, market research, etc.—profitability is ultimately the goal. What will be the gains of this action or that program or purchase? What will be the losses? If the short-term gains are negative is there a long-term gain on the horizon that will ultimately prove this action to be profitable?
Profitability, typically measured as extrinsic gain in hard dollars, may also include intrinsic gain. We intuitively understand this when looking at individual incentives for employees or teams. Companies that want to be around for a long time must invest in intrinsic gain strategies as well as extrinsic gain strategies.
With this view in mind it is our position that:
Profit-Ability Improvement is The Umbrella Under Which All Other
Improvement Philosophies For Business Must Reside.
Quality management principles and philosophies, in this view become tools and strategies for profitability where the worth, value or gain of any radical intervention or repetitive system must be measured or demonstrated as extrinsically or intrinsically profitable.
COMPATIBILITY: Our methods and strategies are designed conform to the principles of Continual Improvement, and are directly integrated with, the standards and requirements of TQM, TQC, TPM, SPC, ERP, MRPII/JIT, SCM, DRP, ISO-9000, ISO-9001, ISO-9004, ISO-900X, QS-9000, etc. and other improvement philosophies.
The ability to produce profit, or "Profit-Ability," is a skill. Individuals, groups and organizations can acquire this skill. The gains produced by these "Profit-Ability" skills can be measured using tools that are designed to provide strategic access to data already furnished by many existing information management systems.
As yet, few companies understand how to design such tools or how to utilize the advantages these profit-maximizing tools provide. When anticipated gains are not realized within an expected time frame--from either an existing system or a new-system implementation--people in the company may go looking for a scapegoat. Management "blindness" or employee "laziness" are favorite scapegoats but neither is the real cause.
Ambiguity, uncertainty and distorted perception are the most common causes of poor system performance and the subsequent unrealized company gains. Removal of these obstacles requires accurate, precise measurements, shared vision, and strategies that overcome the natural human resistance to change. Not surprisingly, effective communication requires the same elements, tools and strategies. For this reason companies must develop strategies that directly address communication problems at every level, because these problems severely limit an organization's ability to produce profit.
The ultimate antidote for this malady is a system of accurate measurement that employees administer themselves. The ability to quickly measure skill is itself a skill that takes time to develop. Yet the time required to establish a valid measurement system is often seen as too complex and too costly by both employees and management. When individuals attempt to develop these "Profit-Ability" skills on their own, without a formal method, the results can be disheartening. But when undertaken as a shared effort by an entire company or group within a company the start-up times can be considerably reduced and the process becomes much more rewarding.
The tolerances imposed upon us by today's competitive ideals are quite narrow when compared to standards of the past. Current profit margins and the competitive demands for same-day service do not tolerate vagueness. Not only is it vital to develop strategies and methods that bring each individual up to speed quickly, but precise agreements and factual data are essential if deadlines are to be met and promises are to be kept. Proactive intervention through a system of accurate, timely measurements is a crucial strategy for keeping everyone invested in the future of the company.
Developing a system of accurate performance measurement--that both employees and management can invest in and trust--is how freedom is extended, and how high performance is maintained, in today's work environment.
ERP & Hoshin Kanri…
Profit-Ability Improvement... (¬Click here to see definitions)
Profit-Ability Management Principles... (¬Click here to see definitions)
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Hoshin Kanri & Deming's Plan-Do-Check-Act... (PDCA) Cycle…