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The C Words in Operations Improvement

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The C Words in Operations Improvement

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Andy Sheppard shares an article on the 5 Cs of operations improvement.

Workers can often feel that their efforts to change are not being appreciated. This tends to be perpetuated if managers have been tasked with the default priority of reducing costs. Furthermore, mixed track records with such cost-reduction initiatives means people throughout an organisation can start to ask “what has operations improvement ever done for us?”

This evokes a classic line in British comedy. In the Life of Brian, the character played by John Cleese attempts to incite a mob with the rhetorical question, “What have the Romans ever done for us?” After a flurry of unexpected answers, he is forced to rephrase his point: “Alright, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?”

Limited perspectives of operations improvement may have their roots in financial reporting. Senior managers who feel pressure to increase reported profit will naturally look at two line items: ‘sales’ must increase and the ‘cost of goods sold’ must decrease. Sales personnel should be held responsible for increasing sales, and operations personnel should be held responsible for reducing costs, right?

COST Further opportunity to reduce costs can always be found, but the intuitive route to achieving this is seldom effective. Cascading cost targets to individual managers creates a one-dimensional, fractured approach which seldom benefits from any change-leadership wisdom. Changes can become petty and organisations start to suffer from a vicious cycle where morale is constrained, which constrains potential and performance, which leads to more cost-reductions, and so on. The good news is that by becoming more strategic about operations improvement, leaders can break out of this cycle. This requires a broader perspective of what their operations influence: not just Cost, but Culture, Capacity, Customer service and Capital. Let’s refer to these as the 5Cs of operations improvement.

Key points include:

●  Capacity constraints

●  Cultural transformation

●  Cascading cost targets

Read the full article, What has operations improvement ever done for us?, on Linkedin.