The Process Ninja

The "Dead Time" debate continues @ Process Cafe

Gary over at the Process Cafe has continued the discussion about my concept of "dead time" - he takes the concept a bit further than I did and it's a welcome extension to my thinking! (I like it when others do the thinking for me!) Check it out his article "Dead Time...How Do You Treat Yours?"

Have You Lost Control of Your Processes?

Is it all falling apart? Oh dear, what has gone wrong? Did you think about controls when you built that shiney new process?

When Joy Division once sang "And she showed up all the errors and mistakes, And said I've lost control again." in their eponomous song "Control" they hit the nail on the head. Control is about reducing the errors in process, it is about reducing mistakes and it is about keeping the process true to its original intent.

When you create a new process or fix a broken one you must create process controls. What I mean by this is that you must have means of keeping the process on track. Think of it a bit like a slalom skier going down a course. His goal is to get to the finish line, but he has to follow the flags or he gets disqualified. But how do you set controls?

Choosing the controls can be as simple as looking at your process and thinking about what are the drop dead, must happen steps in the process. How many you have depends on the complexity of the process (but don't overdo it). Once you have decided upon your control steps you should continually audit the process to ensure that the control steps are being adequately met.

Ian Curtis, the lead singer of Joy Division eventually committed suicide - tortured by his inner demons and his inability to control his world. Thankfully we have the simpler task of controlling business processes, but the lesson here is the same: if you lose control you can be left with nothing.

- TPN

Proving the value of process: If it moves, measure it, if it doesn't move, measure it

STOP! Don't do anything. Sir, move away from the process. Before you think about changing any process for the better there is one thing you must do: MEASURE.

Why measure when you know it's broken? Why measure when it's already caused a catastrophe? I'll tell you why; because one day some little prick with a bald head and a bad suit will come along and say "how can we justify all this spend on process?" and if you haven't measured anything you will have nothing to disprove him. He'll pack up your little process shop and go back to counting his beans, happy in the knowledge that he's saved money - even though we know he's cost more money in the long run.

So here's what you do - measure everything. Measure before you start, measure when you're finished and keep measuring when you're done. After that, start measuring again. You must always be constantly aware of where you are - that way when you make a change you can measure exactly how much you've achieved and thereby prove the power of process. Process is your compass, but if you're in the dark you'll never see where you've come from or where you need to go.

- TPN

How (and how not) to throw money down the drain with process

You'd think that in the midst of the "GFC" companies would be looking at ways to make their processes more efficient, yet there are still many companies out there that like to throw money away hand over fist.

One of these companies is a furniture chain called Fantastic Furniture ("The package deal kings"). I like fantastic furniture. I don't like all their products, but I get what they are trying to do. They are the budget furniture company and they've pretty much got hold of their target market by the short and curlies. Now this isn't a story about customer service - it's a story of internal process. I'm not going to whinge about them from a personal point of view as when you buy something  cheap you often get cheap service - I can live with that if the price is right. But what I find amazing is when a company like theirs wastes money. OK, here's the story...

I looked online at their website and found a bed and cabinets that I wanted to buy. Actually I'd already seen it in the store. I would have loved to have bought online, but alas, no online store.

Mistake no 1: no online store.

So I call my local store and ask if it's in stock. Yes the bed is in stock he tells me but the cabinets will take longer. OK, says I, can I buy the bed now and collect the cabinets later? Yes, says he. All I need to do is pay a deposit over the phone go to the store, pay for the bed and then go and collect it at the warehouse?

Excuse me? says I. Can't I just pay for it over the phone and collect it from the warehouse? No says the man.

Mistake no 2: Poor process design fed by bureaucracy.

So I go to the store they look me up in the computer and alas I'm not there. We spend 10 minutes wrestling with the system and several calls to a mystery voice of god that tells them that that particular till doesn't work. They then find me and I actually get to pay for my bed.

Mistake no 3: Poor communication & IT support processes.

They then tell me that my items are all in stock - but wait didn't they tell me that my bedside cabinets were out of stock only 2 days ago?

Mistake no 4: Poor stock control and inventory processes

So I finally complete my transaction. Or at least I think so. The staff then take a manual docket pad and write out my receipt. Let me repeat that - THEY WRITE OUT MY RECEIPT. What on earth does their system do if it can't track stock and it can't print a receipt?

Mistake 4: Manual processes due to poor system functionality

So I take my hand written docket and drive to the warehouse. They give me an inaccurate map which gets me lost before I eventually find it. I get there and give my receipt to the chap at the warehouse. He looks at it and asks why I don't have a green slip. I tell him that's all they gave me. He grumbles that as they didn't write it out fully it will take longer to find the stock. He then proceeds to look up the computer and...write out another receipt. Did you get that HE WRITES OUT ANOTHER RECEIPT and gives that to me.

Mistake 5: lack of quality controls to ensure processes are followed

I eventually get all my stuff. It only took me 1.5 hours. But what did it cost Fantastic?

• Phone call - 5 mins
• Staff computer error - 5 mins
• Writing Docket - 2 mins
• Looking up system & re-writing docket - 5 mins

Total "lost" time = 17mins FOR ONE CUSTOMER AND ONE TRANSACTION!!!!

If you think about this in terms of the cost for 17 minutes of staff time multiplied by thousands of transactions you can envisage the amount of money fantastic are throwing away. Of course they could have avoided this entire 17 minute cost if they had an online system. But even if they didn't all they need is to update their system to be able to track stock in real-time and to eliminate the inefficient paper based system that they have become accustomed to. This would allow online tracking, reduce admin costs, control stock flow more efficiently and reduce customer touch time to allow their staff to concentrate on selling rather than performing laborious admin.

Fantastic, the Ninja has spoken. Please stop throwing your money away.

Using measurement to improve your business

My recent post on chefs has provoked some further questions, and one of those questions centred around measurement, ratios and monitoring of how my cafe was performing. I wanted to share some of those insights with you. Here's how I used measurements to help to improve my business:

Revenue:

"Revenue is vanity, profit is Sanity" - this is some of the best advice I've heard. OK, the cafe needed to make money to keep going, but profit is always the most important measurement.

However I measured my revenue (and GST) via my POS (point of sale system). This system also allowed me to have a breakdown of the number of customers and the type of items that were selling. Therefore I would periodically "prune" the menu to bring in new dishes to improve sales. It also helped me to monitor the number of customers over a period of time and to identify whether average spend per head was changing over time.

Profit:

Profit can be tricky to measure in a complex business - but it is absolutely vital! But to measure profit you must understand costs...

Costs:

The percentage guide is a methodology that some café or restaurant owners use to manage the costs of their business. It states that each cost should fall into a category which makes up a particular percentage of turnover (ex GST), as follows:

Category              %

Staff wages        25-35

Food                  25-35

Rent                  10-15

Other (utilities, insurance, repairs, etc.) 10-20

Profit     = Whatever is left!

The percentage guide is useful, but the most important thing to remember is that there must be balance. E.g. if the staff costs are high, this should be balanced by the food costs or rent being a bit lower. You can see that if all your costs are at the top end (35+35+15+20=105%) – you will be losing money!!! But if you can keep all your costs low (25+25+10+10) you will make a 30% profit (which is very good for a café). What you should do when looking at the financials is to work out the percentage for each line item.

What I did was to meaure my food and staff costs on a weekly basis using spreadsheets. As time went buy I would test out new staff rotas and tweak menu items to cut cost - but which did not affect another key item - quality...

Quality:

I developed a process centric business. I had operation manuals, checklists, etc to ensure that the business ran consistently whether I was there or not. Staff knew exactly what needed to be done at any time of the day and what the standards of the cafe were. Consistency and quality are key to a cafe or restaurant. Customer surveys help to monitor our customer service and food standards. In essence it was developed like a franchise - and this helped me to be able to step away from the cafe when I needed to.

Measurement is vitally important for any business - not just to be able to understand "where you are now" but to measure where you have come from...