The Third S – Standardize
You Strategized and then Simplified your products and business processes. Before you Scale them, I highly recommend you Standardize them, as standardization has significant benefits for your business. Consider the following:
Standardize Your Product Product standardization helps you achieve a lower product cost by taking advantage of economies of scale and negotiating better terms for your raw materials and PPV (Purchase Price Variance). Your in-house manufacturing facility and outsourcing partners use the same raw materials across many SKUs and utilize the same machines and techniques in manufacturing. Further cost benefits also come from assembly and manufacturing efficiency since product variation is minimal. Finally, the learning curve is more exponential, substantially reducing the risk of failure. All in combination, you reduce your OPEX (operating expenses) and variable costs. Your standardization efforts may help you improve your competitive advantage since your total cost decreases. With a bit of innovation, you gain a stronger top-line (revenue) as your brand gains more equity advantage over others. An example from the past -- we used the same printed circuit assembly for different SKUs, even prestigious brands. While consumers saw different shapes, colors, and brand products, the internal components and designs of these products were the same. This allowed us to leverage economies of scale, reducing our product material cost to a minimum. Our product development costs decreased since the engineers standardized the electronics module in size, fit, form, and function; we could spend our energy on mechanical and industrial design aspects instead. Overall, we launched our products faster, accelerating revenues, and designed more value-added upgrade products with the same resources, which is even more to our top-line. Standardize Your Business Process Business processes can be standardized after they’re simplified, similar to product standardization. This means you build the simplest viable and repeatable process that delivers results. It supports your business and provides results efficiently and effectively. Process standardization removes ambiguity among team members about expectations and business outcomes since they follow an already established set of rules for accomplishing tasks. This, in return, improves your employee morale, overall productivity, and delivery quality. Business Process Standardization goes hand-in-hand with Product Standardization, particularly regarding the DFx (Design For excellence) efforts with subsets such as Design for Commonality (I call it commonality via modularity) as we discussed above, Design for Assembly, Design for Manufacturing, Design for Testing, Design for Quality, Design for Supply Chain and so on… The ultimate goal in DFx is building the best working business process in its simplest form that gets standardized so your employees follow those guidelines. Standardize Your Documentation Talking about the guidelines… your standardized documents will support and institutionalize your standardized process. Initially, writing playbooks and standardizing them takes time. But, in the long run, it saves time, reduces errors, and provides consistent information and guidelines. Newcomers to your company can refer to these documents and follow the guidelines, especially without a well-functioning buddy or mentorship program. Let’s not forget the version controls to provide clarity for changes. Otherwise, we create more chaos than necessary. An example from the past – My team developed and implemented the best business practices in Product Management, PLM, Business Strategy, Operations, Leadership, DFx, Make vs Buy decision-making, SIOP, and Strategic Procurement at our clients. One of our clients sent us a thank you letter following the COVID-19 outbreak, explaining how grateful they were for the robust system we left behind with a written playbook that new employees could learn from and follow. They kept delivering strong results quarter after quarter, even during and after the pandemic. They said their financials have been more robust than ever. Take Standardization seriously, as it plays a crucial role in delivering sustainable results. We will cover this again in the Sustain section yet to come. Also, standardizing the product, process, and documentation makes credentialing, regulatory compliance, and audits much more straightforward. As a result of these well-implemented steps, we passed the ISO 9001 audit in under two hours instead of taking days. Email us for expedited results. Additional Reading for this section: Process Standardization A Complete Guide – 2021 Edition by The Art of Service – Process Standardization Publishing Process Mapping and Process Improvement Standardization Workbook: Standardize The Continuous Improvement Process With Standard Operating Procedure Templates by The Lean Culture Organization
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AuthorJames Stanford Archives
January 2024
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