Good business is all about building a positive cash flow. Run out of cash and you run out of business. It’s very simple…
However, sometimes business gets constricted and the cash flow slows down. When this happens it’s time to go on the hunt for the bottleneck – the constraint that is getting in the way.
There are two great methods for finding a constraint:
1. Go for a walk round your organisation. Look for piles of work in progress – this shows where work from one section is piling up waiting for the next section to complete it. To get rid of the backlog you will need to find some extra capacity, or will need to slow down the first section so give the second section a chance to catch up.
2. Follow the paper trail. If there are six desks in your office and one is covered in piles of paper – that station is the bottleneck. In practice, the absence of something is also good evidence of a constraint, for example if you’re always waiting for a purchase order to be signed then the bottleneck is probably the manager who signs them.
By the way this isn’t a blame game. Bottlenecks are often caused by a lack of planning, starting too much work, inefficient workplace organisation or poor management. People come to work to do a good job and can be defeated by a system that gets in the way!
Once you have found the bottleneck you have a choice:
a) Ignore it and hope it will go away (it won’t).
b) Stop the process and change something. Maybe buy more capacity, simplify a procedure, remove unnecessary processing, have a planning board, or restrict the amount of work heading into the constraint area.
Bottlenecks can affect us all. Take a look at your work load and ask what tasks have piled up around you and what could you do differently?
Here is an exercise to get you thinking:
A clerk visits 3 potential customers a week. The clerk has time to write 1 report a week, so he writes 1 report and aims to write the other 2 at the weekend. After a month he has visited 12 possible customers and written 5 reports. A customer will only buy from him once they have read and signed the report he writes for them. There is one report per customer. Spotting that he is behind with his work you go and talk to him because the business would like to have 12 new customers each month and his slow report writing is getting in the way of this. The clerk apologises and promises to work harder.
Do you accept this as a solution? What options do you have to remove the bottleneck and win more customers?
You’re welcome to email me with your thoughts…and I’ll tell you what I said to the clerk.
Have fun!
Next week: Three Essential Things For Business Success