Do you have a feeling you should be able to get more (financial) results from your business?
Do you feel hampered by the ever-increasing amount of requirements from your customers and external certification schemes?
Is quality management (or more general – business excellence) perceived as being driven by compliance reasons, just to have a certificate on the wall?
This happens in many organizations. What people fail to see is that impactful, strategic management has a strong and positive effect on the company and its financial results!
But how do you create that level of impact in your company as a manager? Too often you are bogged down by the day-to-day demand and supply issues, customer complaints, blocked stock, external audits and just managing the complexity of all the items in your company-wide management system.
In this article we’ll share seven important steps to help you move away from a reactive management approach and have a real impact on the (financial) business performance of your company. The steps in themselves will sound straightforward and simple, but it takes a lot of determination and focus to successfully deliver each one of them.
1: Ensure you have a good team
Every success is defined by the team. In many companies, there has been a tendency to find places to “park” employees that did not fully perform elsewhere.
While this approach could have been justified in the 1980’s and 1990’s, nowadays it’s a dangerous route! In most countries around the globe there have been significant changes to food manufacturing legislation. GFSI standards like BRC, IFS, FSSC 22000 and SQF have since been established. Over the years they’ve been a major driving force in raising requirements in quality and food safety management.
The same holds true for almost every other discipline in the organization, ranging from finance and HR to logistics and supply chain. In other words: management in the food manufacturing industry has become a truly complex discipline.
For this reason, it’s important to assess strengths and weaknesses of your team members and their knowledge and ability to work with other people (influence them). It’s also good to have an overview of the overall team workload. Standard levels rose sharply over the last 5-10 years, whereas most of the time the size of teams shrank. You might be facing a work-overload situation that needs to be addressed first.
If there are true non-performers in your team you must ensure you take action. It’s OK to recognize that not everybody is at the desired level yet – you can get them there over the coming years. As long as you create the focus and continue to invest in people’s skills and competencies, you will be able to build a strong and high-performing team.
To learn more: How to Build a Strong Team in 6 Steps.
2: Get insight on failure costs
Once you know the strengths and weaknesses of your team it’s time to start doing the same for the business performance of your organization by gaining insight into failure costs.
The reason why these are so important is that they are expressed in money – and money is the universal language all managers and company owners understand. If you need to convince your manager to invest in your team and in your department’s activities in general, you need to be able to make the benefits explicit. And this is always done with money!
Most management systems deliver only a partial insight into the total failure costs of a company. Each departmental manager and the finance department should work together to set up a systematic process to track them. Cost categories can be the standard ones, like complaints, not-right-first-time products, returned goods, degraded products, scrapped products etc.
Most of the time you can even use the same approach to create a historical overview of failure costs during the past three years.
The numbers might be higher than you expect, but this is good news! It means there is a lot of room for improvement.
The other benefit of making failure costs visible is that most of their components have a direct impact on the company’s profit. Almost every item is an additional cost that, if structurally avoided, will increase the company’s profit.
To leran more: 4 Essential Steps to Make Failure Costs Transparent
3: Create awareness / sense of urgency
With a good team (or at least a clear path to build one) and clear insight into failure costs, you can have the attention of your senior management and company owner.
When you present your plan to them, you want to show that general business excellence and a clear focus on underlying profit drives is nowadays crucial for any successful company. You should stress how regulations and certification requirements are continuously changing and increasing the demands on your company and use examples of other companies (preferably from your type of industry) that have faced severe issues in the market for not managing these aspects correctly.
One more item you should have in your presentation is a comparison between the impact of a safety-related fatality within your company and a food safety-related fatality of a consumer of your products. As you will find out (just by looking at the newspapers) the latter can be detrimental for company and in some cases even lead to bankruptcy. This hardly ever happens in the case of a safety-related fatality within the company, which is of course a tragic event, but it will not threaten its continuity.
If you want to have a good example of this type of presentation go to our website – we have posted a sample presentation there, which you can download for free.
To learn more: 5 Steps to Create a Sense of Urgency in the Food Industry
4: Together, define a multi-year plan
Once you get your senior management and company owner to agree that working on team capabilities and business excellence are a priority, it’s time to create a multi-year plan.
When you define its content, focus on the right things in the right order. You can start by making a first draft yourself or with a small team, so at least you know where you would like to take each department in the coming years. But leave it at that – a draft.
A plan is a good plan only if enough people believe in it. What’s more, it should never be just YOUR plan. It should be owned by a much larger group. For this reason, you should work on it together with the relevant people, especially your senior management and your team.
To make sure you are aligned with your senior management and company owner, set up one-on-one meetings with each of them, with the clear purpose of talking about your multi-year improvement plans and exchanging ideas. Only explain your draft at the end of the discussion. Let them do the talking first – you want to understand what aspects they consider important. Quite often you will find that the general direction is the same, but by playing it this way you might get additional insights and more buy-in because the senior manager has been able to express their ideas.
When you work with your team, you should take exactly the same approach and build you multi-year plan together with them. Show them the outcomes of the assessment of your department, the results of the failure cost analysis and the presentation you gave to your senior management. Then, encourage a discussion.
Again, refrain from presenting your ideas upfront. Rather, build the plan from scratch with your team members so they will really own it. The last thing you want is a team who see the plan as the boss’ idea. The wording and also some of the priorities might be slightly different. It’s OK – you only want to push your thoughts on topics or priorities that REALLY matter.
To learn more: Create a Strong Multi-Year Plan in 5 Steps
5: Create a true focus in improvement activities
One of the biggest mistakes with improvement plans is not prioritising projects and improvement actions. The majority of food companies are working within one or more GFSI certification schemes where one of the mandatory requirements is to perform a root cause analysis and set up corrective and preventive measures (CAPAs) for food safety related complains, CCP breaches, external audit findings, etc.
Quite often, this has been translated into: “we will perform a root cause analysis followed by corrective and preventive actions for every issue we encounter”. This is not manageable, takes a lot of time and leads to shallow improvements and usually little or no results.
Yes – you must perform a root cause analysis on mandatory topics related to your certification scheme. There might even be some other mandatory areas related to your country legislation. But for the rest, you want to take a different approach! Make a historical overview of all the issues of the last (two) year(s) (e.g. not-first-time-right product, blocked products, complaints, issues and recalls) and create a Pareto chart from them.
All of this information will already be available as part of the failure costs analysis. Once you have the Pareto chart you can see which topic gives you the biggest monetary loss – this is the area you want to place your improvement efforts on.
The strong point of this approach is that you focus all your effort on creating the maximum result. And when results get in, people (including senior management) will see that your plan is working! This is a very powerful flywheel that will only make you and others strive for more.
To learn more: 5 Steps Towards Truly Focused Improvement
6: Manage issues
Despite all of these efforts, you still might face issues such as repeating complaints, more severe complaints (e.g. food safety-related) or complaints with your biggest customers. In that case, you must focus on those as well and pro-actively manage issues when they occur. This way you have the highest likelihood to keep customers and – equally important – your internal stakeholders happy and costs low.
If you fail to manage issues correctly it will only impede the execution of your multi-year plan and give reasons for senior management to start doubting your plans or even your capabilities. So next to focussing on one big topic, you MUST manage all issues at hand with priority.
Make sure you plan for this. Leave at least 1 hour per day available for yourself to manage severe issues, preferably at the start of the day. Of course this is too little a time reservation when an issue really occurs, but it does two things: the first hour you have available anyway, so you don’t lose out on other things, and if there is no issue you can use that hour to work on the big improvement (so you will move forward faster than planned if there are not a lot of issues). Don’t spend the hour reading emails or sitting in meetings etc.
When managing issues there is one more important thing: keep track of your actions by defining them and following up on all of them. You might easily lose sight of the overview if there are several issues at hand at the same time. Have a look at our blog at Food Safety Experts on inspection rounds as it contains a link to a powerful action tracking tool in Excel, which is free for you to download.
7: Celebrate all wins
The other powerful flywheel is celebrating your wins. Quite often managers have a tendency only to review performance and celebrate the success once a year. This is far too infrequent! You really want to take the opportunity and celebrate every success, no matter how small it is.
It’s not about bragging but showing recognition to those who made it possible. Celebration does not necessarily mean you are going to eat cake or give (financial) incentives to people, although you should do this from time to time (certainly when you have big wins). You also want to give recognition for the smaller wins. You can even link this to a competition e.g. “Employee of the Month” or “Improvement Guru of the Month” and give an inexpensive perk like the front parking spot for the coming month.
If celebrating success is not (yet) part of your company’s culture, start now, as it’s also a crucial enabler of the overall success of your approach. It’s the fuel of your multi-year plan, because 90% of any success is defined by the motivation and ownership of the people who have to deliver it!