​Using systems to reduce staff working hours in business

Many successful business owners are able to market their way to more customers, higher sales, and an increase in the number of profitable relationships with customers and vendors. In most cases, their businesses start from a one-man operation, and over time, slowly increment the number of personnel to allow for business growth and expansion. Rudimentary business systems that are appropriate and sufficient for small-scale operations soon become obsolete, cumbersome, and unreliable. In this case, key management information is lost, not processed properly, and even not processed at all. More often than not, there is confusion and redundancy, which can cost a business money, time, and even its good reputation. This is where a business system becomes a crucial factor in determining a business’ success or failure.

A business system is actually an internal “system” within a larger system or “operating environment” that includes customers, vendors, and even the government. It is important to gain a good understanding of a business’ resources, capabilities, operating procedures, and costs to more effectively operate the enterprise.

It is extremely important to understand how the systems work to determine if these are meeting the needs of the organization. We will discuss how internal business systems can be crucial to an operation. An overall business is comprised of two basic system components. In both cases, the key is to obtain and process the information that these components generate to assist in the decision-making process.

1. Primary or Business processes – These are activities, procedures, and operations that transform "inputs" to create the business’ product and service. The most basic categories are:

- Using raw materials to produce a product

- Buying products for reselling or consignment (wholesale or retail activities)

- Using manpower to create a service (professional services such as legal services and bookkeeping).

In this area, systems are needed to determine the most cost-effective and efficient way to procure and/or buy the “inputs” for making the final product. System improvements that will enhance this area include:

- Establishing lists, contacts, and profiles of suppliers and their products

- Developing a system to monitor inventory control and machine productivity, to identify backlogs and loss of productivity

- In the case of professional services, human productivity, for example, devising a system to determine how many hours of an employee’s work day is devoted to down time or breaks

2. Support processes – These activities are not directly related to creating the final output but are indispensable and necessary to run the business. They often significantly affect the output component in a business if proper attention is not paid to them, especially in the case of professional service firms that rely on the human resources function.

Aside from human resources, these support processes include sales and marketing, distribution, accounting and bookkeeping, collection of receivables, payroll, information technology, procurement and supply management, and training but do not directly relate to generating business such as bookkeeping, using technology, procurement and supplier management, managing staff and partnerships, training to improve expertise and hone skills, and generating usable and useful management information.

Many entrepreneurs tend to focus, and rightly so, on the input side of the business processes because this where their expertise lies and where they are most comfortable with. It is often a good idea to make them concentrate on these areas and leave the support processes to other capable employees, or even third parties.

However, it is vitally important to have a good understanding of how these processes impact the business. Support processes, while not directly impacting the business, involve a wider range of disciplines, skills, and attributes. A business needs accountants, salespeople, purchasing clerks, human resources administrators, collections staff, payroll processors, administrative assistants, and employees performing other functions.

If these functions and their related activities are not properly monitored and controlled, finished products from the input side may just as well remain unsold, collections from their sale uncollected, and funds collected from their sale being wasted and exhausted on unnecessary activities and purchases. Other consequences are serious, if not fatal, to a business: dissatisfied customers who cannot secure proper customer service, frustrated employees, work duplication or redundancy, and overpriced sources of products and services.

To properly organize these functions, it is imperative that a system is devised and that the following principles are followed:

1. Document everything - It is a good first step to keep in mind that, especially in support processes, there are an unlimited number of processes, situations, procedures, forms, and reports that need to processed, tracked, and warehoused. It is important for the business to have a paper trail of most of these to ensure that less time is spent later on looking for, and worse, recreating them.

2. Organize personnel - Develop an organization chart to properly delineate and define functional relationships such as manufacturing, sales, finance, and administration so that the proper personnel and skills can be placed accordingly. Within the chart, reporting relationships helps streamline and enhance communications and strengthen the functions.

3. Create and document specific functional and individual roles and responsibilities - For example, define what the marketing/sales function is supposed to accomplish, and within that function, define in detail the responsibilities of sales and marketing personnel, including how they need to report their activities and accomplishments. This also helps efficiency in the case of terminations and absences, where replacements can quickly step into a vacant position by reading and studying job descriptions.

4. Create procedural descriptions, and even flowcharts to document the processes - These help in assessing whether current policies and procedures make sense and enable decision makers to see, at a glance, how things work within the company.

5. Require that management information is created and distributed at the end of each process - Any system is effective only if it is able to provide the correct information on a timely basis to the owners and decision makers. Marketing reports, financial statements, and cash flow forecasts are just some of the crucial reports that need to be generated on a regular basis to help report on the results of a business.

REFERENCES:

1. http://www.kaizencoaching.com.au/articles/business_system.htm

2. https://www.mindtools.com/pages/article/improving-business-processes.htm

3. http://www.boxtheorygold.com/blog/bid/49839/Four-Business-Improvement-Methods-You-Should-Know-About