Systems and processes are all about execution. How many times have we heard sports coaches say that all the planning is completed and all the preparation is carried out. Now all that is needed is the execution. In a business sense, the coaches are referring to systems and processes.
Systems consist of everything set up and in place for producing a particular product or service. Processes consist of the sequence of activities that move the materials or procedures through various stages until the desired product or service is complete. Some systems require more than one process.
Although it’s possible for a small company to have only one system, most businesses have several. Some of these systems may function as departments or groups. Every system has three basic elements: (1) input: what goes into it (materials, workers, and time), (2) work: the techniques used (processes), and (3) output: the result (the desired product or service).
Systems and processes go hand-in-hand
Viewed from the perspective of coaches with respect to execution, systems are the tools and resources deployed in the execution, and processes are the “work” or the sequence of activities of the execution. Systems and processes go hand-in-hand: systems supercharge processes, and processes bring life to systems. They complement each other. And when you consider them together, you can innovate entirely new ways of getting work done.
Efficiency in execution is a primary concern. In today’s economy, survival depends on it. While the coach emphasizes fundamentals, all team members need to understand exactly what needs to be done and make it happen. LEAN processes look to develop new ways of completing the work with as little waste as possible. This type of process improvement is continuous. When you achieve one level of performance, you look for the next improvement. This is a cycle. It is a discipline. It is a culture. The focus is on the process. It is marvelous and the improvements are dramatic at many levels.
Redefine what work really is
System innovations can entirely redefine what work really is. Think of gathering payroll hours manually. Then think of a timecard system that integrates with your payroll system. Leap ahead with on-the-spot labor collection systems that integrate with payroll. Then take your workforce dispersed throughout the country on jobs and mobile devices, and have them use cellular technology to transmit their work completions to a payroll system in a central office 24/7/365. The work is different in each of those scenarios. Innovation morphed the work into something entirely different.
Combining both systems and processes into your work improvement strategies is a win/win. Use it to raise your work up to world-class performance levels of efficiency and effectiveness while you simultaneously redefine what work is and how it is done. Many times these changes innovate and blaze new trails in what have traditionally been well-understood processes.
Monitor improvement with benchmarking and best practices comparative analysis
How can you monitor the effectiveness of using these innovative business performance levels? Comparative analyses use benchmarking and best practices to provide tangible metrics for comparing your performance with that of others doing the same or similar tasks within the same or similar industries, and provide a framework of key performance indicators (KPI). These key performance indicators then serve as the monitoring mechanism to stir the competitive nature in all of us. The best practices or benchmark metrics may be used in goal setting. They give you something to strive for. Look at fantasy football leagues. They run on metrics and current conditions.
The benchmarking framework may be one of the building blocks of your business performance management system. You can use this system to comprehensively look at your business processes and create the feed-back mechanisms to monitor whether your business systems and processes are performing at high levels. It is wise to know how the best practice or benchmarking metrics compare to yours in your current process state or a realistically achievable future process state. Linking the best practices or benchmarking metrics to your processes is where you will derive the actionable improvement to your processes and improve your metrics sustainably.
If you would like to determine a method that will analyze and improve your systems AND processes, and integrate monitoring systems to keep your business systems and processes razor sharp, we can help you do that. We combine our knowledge of the disciplines of financials, operations, technology, and process efficiency, quality, control, and innovation to help improve your business performance.
For more information or discussion about these concepts, please call Dan Koszalinski at 800-236-2246 or 920-996-1495.
Dan Koszalinski, CPA, CMA, works with businesses to help increase profitability with better financial management, cost management, and process improvement. Dan serves clients firmwide. He is a member of our manufacturing team, retail team, financial crisis response team, and risk services team.