Efficiency in individual departments or areas of a company does not necessarily mean high organisational efficiency. What matters for organisational efficiency is looking at processes end to end, since they typically run across departments and areas. Defining and shaping the interfaces plays a central part in being efficient across those boundaries.
Delivery in mid sized companies therefore calls for a layered view that takes account of the individual departments with their roles and of the interfaces, so that each role is able to complete its process steps.
Below we present some typical situations in mid sized companies that need to change in order to improve organisational efficiency.
In administration
In the administrative side of a company, that is in order processing, purchasing, finance and so on, you usually find the typical core processes:
- order to cash (from the customer order to payment received)
- purchase to pay (from the requirement to payment made)
- record to report (accounting, monthly and quarterly closes)
The typical findings in practice are duplicate data entry with parallel spreadsheets, unclear authorities and poor master data quality.
A positive contribution to organisational efficiency can be achieved through deliberate change:
- Recording the processes, focusing on media breaks, interfaces, waiting times, missing information, the number of repeat loops and the queries needed
- Improving the process chains, focusing on clear responsibilities, for instance central creation of orders and master data, standard forms, checklists and simplified release and approval rules
- Support from IT and digitalisation, focusing on the use of an ERP (enterprise resource planning) system and a DMS (document management system) and on establishing workflows, for example for order approvals, holiday requests and incoming invoices
The various interfaces set out that all the information required is available in the right quality, complete and on time. From this follow the requirements for the process chains coming into and going out of a department.
In production
Production regularly holds the core process order to delivery (from order intake to despatch). From this follow the central topics of a production operation: material flow, production control, set up times, stock levels and quality along with quality control.
A positive contribution to organisational efficiency can be achieved through deliberate change:
- Value stream analysis to record the flow of material and information from order intake to despatch, measuring throughput times, processing times and stock levels and setting out the bottlenecks.
- Improving layout and material flow by shortening distances, creating a logical sequence of workstations and providing material in the right quantity at the right time using suitable methods.
- Reducing set up and processing times through SMED approaches (single minute exchange of die), standard work instructions and better provision of information.
- Improving production control with clear prioritisation rules, realistic planning and less work in progress.
- Establishing shopfloor management with regular short meetings and a key figure board for key performance indicators such as overall equipment effectiveness, reject rates, on time delivery and set up times.
- Assigning responsibility to one or more team leaders with accountability for results, involving maintenance, logistics and other areas relevant to production.
The interface question is usually considerably more complex in production. On the one hand the inflow of information has to be secured and must contain all the relevant production data. On the other hand production supplies information to various departments or areas for steering individual orders and the company as a whole. Material withdrawals have to be documented, labour and machine times recorded by order or department, and much else besides.
Factors critical to success
Efficiency improvements in end to end processes and across the organisation as a whole succeed through a holistic view of the requirements the company has to meet. The organisation defines where in the company each requirement has to be met and what is needed for it. The what can arise from a large number of upstream process steps. Every process step therefore has to take account of what the steps downstream need.
In summary
Organisational efficiency means building the whole company, its processes, roles, structure, steering and culture, so that value is created reliably, within the given timeframe and with little friction. A sensible mix of attention to detail and focus on the overall picture is what delivers efficiency in a company.
THE MAK'ED TEAM develops effective approaches for mid sized companies across all sectors to improve efficiency for the long term. We understand organisational efficiency as a process management system for steering the company as a whole. Combined with the strategic direction, it makes a valuable contribution to lasting competitiveness.
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