Have you, as a business owner, heard this conversation inside your head?
I know Operational Excellence is important but not now. My business functions in a high competition, hight rental, manpower dependent, high cost of goods arena. Because there are so many other brands in my area of business, if I snooze, I lose! This is even before I consider the highly competitive rentals for prime locations and the extremely high labour costs in Singapore. Adding the ever-increasing cost of goods, we hardly have any margins left to indulge in Operational Excellence! The business is barely profitable.
In today’s increasingly complex, competitive business world that is further impacted by global geo-political challenges, both corporate owned and franchised businesses need to keep growing into diversified territories instead of staying put to spread business risk. Instead of prioritising daily task to get through the immediate urgencies, we propose that business owners set their eyes on improving operational efficiencies whilst simultaneously expanding the operations.
Achieving operational excellence ensures that business processes are fine-tuned to the point it can be replicated consistently, with quality and compliance assured so it can scale reliably. It is essential that companies strive towards ever incremental improvements in their business processes so as to achieve long-term sustainable growth.
Key performance indicators and core principles of operational excellence
By adopting the operational excellence initiative, companies can realize more efficient business and operational processes, reduced costs, increased revenues, quality improvements, empowerment in the company culture, and enhanced customer relationships.
Business owners, after incorporating operational excellence in the business strategy, can create a sustainable competitive advantage, leading to increased profit margins over the long term. In the case of a franchised business, these practices are even more useful to help the entire franchise network maintain standards across franchised units and achieve customer satisfaction.
Many business processes are focused on developing strategies around the competition and cutting costs. In the world of operational excellence, no news does not necessary mean that all is well. When the impact of the lack of operational excellence maintenance rears its ugly head, the pain of regret is often huge. In franchised businesses for example, issues of food safety or hygiene lapse occurring at any one outlet impacts the entire brand across the network.
Businesses that are forced to take a reactionary approach in light of issues that arise out of safety, hygiene, equipment maintenance lapses or simply poor team training often find that correcting the issues cost them revenue, rectification costs, their brand reputation and customers.
Ultimately, the pain of regret is usually far more than the pain of consistent discipline.
Achieve Operational Excellence. It is the most open secret to building long term sustainability
Yet, many businesses place Operational excellence extremely low on the list, preferring to take the risk. The discipline to achieve Operational Excellence increases the chances of long-term sustainable improvement and staying ahead of the competition since it positively impacts the organization on several levels.
The Role of Operational Excellence in your Company’s Survival and come out thriving
Operational excellence improves business processes for continued growth; bringing competitive advantage to the businesses. The Harvard Business Review’s research demonstrated that companies with peak operational excellence have 25% higher growth and 75% higher productivity. In fact, 70% of your company’s survival is dependent on excellence in operational excellence methodologies.
Franchise brands adhere to principles of Operational Excellence
Operational excellence stands as a linchpin that can spell the difference between success and mediocrity for both franchisors and franchisees. The franchise business model relies on the replication of a proven system, and operational consistency is one of the core principles in ensuring a uniform customer experience across all franchise locations.
Franchisors depend on operational excellence to safeguard their brand reputation that enables scalability, allowing them to expand the franchise network with confidence.
For franchisees, adherence to operational best practices ensures smoother business processes, enhances profitability, and establishes a solid foundation for long-term success within the larger franchise framework.
In essence, operational excellence as part of the business strategy is the cornerstone that fortifies the franchisor-franchisee relationship, creating a pathway to sustained growth and prosperity for both.
Optimize business processes for improved efficiency and continuous improvement
Companies that achieve operational excellence use streamlined, well-defined processes and performance metrics. The improved efficiency eliminates waste while saving costs and reducing service failures. Inefficient processes can result in unsatisfied customers, increased expenses, and overworked staff, all of which will result in decreased employee productivity and profitability.
Operational Excellence for Compliance and Consistency
Customers rely on a company’s ability to offer consistent product service and product quality. It is a brand’s responsibility to ensure that standards are managed across business units, products, and services for reliable customer experience.
You cannot effectively improve what you cannot measure. Hence creating audits and checklists with performance standards and corrective measures help maintain and improve operational excellence standards across outlets and individuals.
Achieving operational excellence improves the decision-making process through big data
Operational Excellence core principles rely on data to measure results of initiatives and monitoring information across time. Data can be collated through in system usage of tools like Audit or training features as well as pulled using Internet of Things (IoT) to collate data like point of sales information, machine utilization and health, production rates, and other valuable metrics to help leaders make good decisions.
The data enables leaders to make better-informed decisions that ultimately have a positive impact on productivity. Companies that have not yet caught up with this technology will quickly fall behind the competition.
Operations excellence empowers the workforce
Engaged and motivated employees are more likely to contribute positively to operational efficiency. Operational excellence often involves fostering a culture of continuous improvement, employee productivity, and open communication. These actions also improve morale, reduce staff turnover, and prevent labour shortages. Studies have shown that employees who are motivated and engaged are 44% more productive.
Achieving operational excellence is possible with the right guidance
While the challenges you face in your business, such as high competition, soaring rental costs, a dependence on manpower, and escalating costs of goods, are indeed formidable, it’s crucial to reconsider the notion that Operational Excellence can be the tipping point of whether of not yet business can scale efficiently into the future.
Rather than viewing Operational Excellence as an indulgence that your margins can’t afford, consider it a strategic imperative for survival and success in your fiercely competitive industry.
Operational Excellence is not merely a luxury for profitable times; instead, it serves as a proactive strategy to address and overcome the hurdles you’re experiencing.
By optimizing your processes, streamlining efficiency, and ensuring consistency in quality, you can not only enhance your competitiveness but also safeguard your margins in the long run.
While the initial investment in operational improvements may seem daunting, the long-term benefits in terms of reduced costs, increased productivity, and sustained profitability are likely to outweigh the immediate challenges. Delaying the pursuit of Operational Excellence may inadvertently perpetuate the challenges your business faces, hindering your ability to adapt and thrive in a demanding market. Embracing operational excellence methodologies now may be the key to securing a more resilient and prosperous future for your business.
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