Addressing Policies

When you look at your business, what do you see as obstacles to your success?

  • Customers demand defect-free products and services
  • Customers want lower prices
  • Employees leave as soon as they are trained
  • Vendors don’t always deliver on time

And the list no doubt goes on. But the key question in addressing these obstacles is, what policies are in place to address the obstacles and are they relevant to your future?

Take, for instance, the demand for zero defects. Everyone wants it and it is now almost a requirement for entry into most lines of business. In the quest for zero defects though, have you put in place multiple quality checks? Perhaps your policy requires a supervisor to check the work and then a manager to check the work and finally an independent department to check the work. But have you walked through the impact of that policy in terms of the effect on the bottom line?

Just this one policy, which was likely put in place when everything was done manually:

  • Increases your costs
  • Increases your lead time to deliver
  • Sees multiple people touching the product multiple times, which most likely is not adding value

This all shows up in the accounting system, although most will not see it for what it really is, a potential drain on profitability. Can you reimagine your processes to keep zero defect without the policy requirement of multiple quality checks?

  • What if we had the employee slow down and do a measurement on her own to verify that the work is within spec?
  • What if we put in guardrails – like ranges in a data entry field, to ensure that outrageously wrong data is not entered?
  • Can the work be redesigned to remove steps which cause errors? Perhaps the batch size of the work can be reduced so the team member can see all the pieces so that the odd piece doesn’t actually get overlooked or slip through the cracks?
  • Can employees “stop the line” if they see something is wrong?
  • Most importantly, are you certain that the policy for QC is helping you achieve zero defects?

Granted, I am somewhat biased since I am an accountant who also has studied Lean, Six Sigma, and Theory of Constraints. What these approaches teach is that cause drives effect and the first place to look in addressing effects is in our own policies. You will see this within the accounting system as well.

The accounting department always seems to be running on overdrive between the 5th and 15th. Why? The closing cycle. Extra hours are the norm and frustrations grow as the team scrambles for documents. But why do we scramble during those 10 days? Policy.

What would happen, and what needs to happen, if we moved to a weekly close process? How about a daily close process? If the work flow is reimagined, can you move to a more frequent cycle without increasing costs?

For instance: Does the team wait until all approvals are in before entering a vendor invoice? What needs to change to get approvals before the invoices are submitted? What are the primary reasons that vendor invoices are rejected? They aren’t? Why is the team waiting for approvals? That’s right – it’s a policy.

You see, most of what drives our business is policies. Policies have their purpose – they potentially bring order to chaos. But all policies should be evaluated quite frequently to ensure they are contributing to your success. Those which can be changed should be. Those which can be eliminated must be. New issues are creeping up? New policies need to be planned, tested and implemented.

Address your policies and see if they can make a difference. If you would like to learn more about addressing policies and their impact on your bottom line, send me an email and lets discuss how the policies can be addressed to help you grow successfully.