Identifying critical requirements can help a business achieve measurable results.
I must admit that this is not my favorite time of year! The shorter days signal longer hours as I start my planning process for the upcoming year, and I am rudely reminded of how few resources I appear to have compared to how much I actually need in order to achieve my goals.
We are all in an industry that is financially demanding. Tight operating margins are often at odds with the capital intensive environment of rapid technology evolution. The financial demands include not only new capital investments, but also the commitment to training and developing good people. Whether it’s time, talent or treasure, committing resources can only be successfully done if you balance the desired results with the resources that are available to commit.
You could always do nothing. A few years ago, I was talking with a colleague who said he does not have a planning process and in fact does not plan. Instead, he buys and hires as needed. Such action – or inaction – is indeed following a plan; it’s just not your plan. Instead you are simply reacting to whatever someone else throws at you, which often ends up being the most costly plan of all.
So as I begin my planning process, I look at the company’s most critical requirements, like the need to replace some pieces of equipment or the need to add capability and remove bottlenecks, against my available resources. The result is never a pretty picture.
That’s where the importance of prioritization enters the picture. Is it a real “requirement” or simply a “want”? Every manufacturing manager has a list of needed capital equipment, and he will probably reveal that regardless of how much his company spends – or does not spend – on capital equipment, many items on the list have been there for years. The simple truth is that if they have been on the list for years and have not been purchased, then they were wanted rather than required items. It's also important to periodically develop a new list based on current and anticipated technology, capacity and replacement requirements.
As with any planning process, some clear, fully communicated and understood goals are needed. Those goals might be as simple as returning to profitability or as complex as entering an emerging market or developing new technology. Usually they fall somewhere in between the two extremes, and there is often more than one goal.
The toughest part is realizing the capacity of employees and if they have the capability to move the ball forward toward the goals spelled out in the planning process. An accurate gap analysis of available skills and man hours vs. needed skills and man hours is often required and might best be performed by a trusted outside party.
The final piece of needed information is equally difficult to get your head around. What will business be like in the next year? Knowing that sales people are often overly optimistic and that we are in a volatile industry and living in an uncertain world, it’s best to develop three scenarios of business – a best case, a worst case and something in between – and base your capital and staff planning on the scenario you are most comfortable with.
Based on the above, a number can be developed representing how much you have to invest during the next year. The number needs to cover everything, not just the capital investment. You need to capture the cost of pre-project research, staff training, installing the processes, navigating the learning curve and other miscellaneous costs that any project or series of projects might reasonably encounter. At this point, you can begin the fun part of planning where you go out and actually do something.
For me, this is the painful part as I realize how little I have compared to how much I want. For me it’s also where prioritizing becomes essential so that the maximum benefit can be derived from the investments that are made. How and what will be accomplished and the way that the accomplishment will be measured become part of how the priority is set. Sometimes the efforts are easily measured while at other times the results are less obvious. In all cases, however, it’s amazing what results begin to unfold as the creativity of your organization is harnessed and those results shine through!
When everyone understands the financial and human resources available, the goals that are desired and the business environment that is anticipated – both good and bad – it is amazing how much can be done. If the goals make business and your life better or easier, the buy in from all involved is even stronger, and the desired results are achieved quickly and at lower cost. That is really what the goal is all about, to get everyone fired up so they are pulling in the same direction and moving the collective organization forward.
This brings me back to my daunting task of pulling out the pad of paper and starting the planning process. Good planning takes time, but it also takes an objective and realistic view of what you have, what you do not have, what is required and what is wanted, as well as communicating the goals, resources and expected results. When the process is properly done, regardless of how great or small your resources may be, measurable results will be achieved. PCD&F
Peter Bigelow is president and CEO of IMI (imipcb.com); This email address is being protected from spambots. You need JavaScript enabled to view it..
