Creating lean operations and an efficient business

Published: Wednesday 8 July 2020

As lock down restrictions start to relax and businesses look to how they will return to their office, factories and stores, business owners will be faced with new challenges not least of which will be the management of their stock and supply chain.

While many businesses have been able to continue to operate throughout lockdown, and indeed some were fortunate to increase their activities as competing businesses closed their doors, sourcing goods and services may start to become more difficult. Particularly, as we all hope, if there is a gradual ramping up of business throughout the UK.

Textbooks over the years have extoled the virtues of ‘lean operations’ and ‘just in time’ stock management, and of course, in an ideal world, that is how anyone would want to run their business.  The practicalities of putting this into place at the moment are likely to be problematic and as always, communication will be key in setting your business on the right track.

Decisions will need to be made as to whether the current routes to markets, whether they are the traditional pre-lockdown routes or new routes used during lockdown, will continue to be viable.  Whatever the conclusion, it is likely that most businesses will have a different look and feel to their customer base and with that will come a different set of demands and requirements.

Similarly, the supply chain will be different too.  There may now be a wider variety, where alternate suppliers were found when resources were more difficult to get hold of, or new suppliers who provide a different set of products and services to those previously used. 

It is important for business owners to recognise these changes and, when planning for the future, incorporate them into their business strategies properly to ensure that they can run as lean as possible. Resources are likely to be limited and the challenges will be magnified where new products, new processes and new people are introduced.

Of course, all businesses are unique and have differing challenges.  At the top of that list will be an understanding of what their market looks like post lockdown but alongside that will be:

  • Cash management
    • what is the current state of the business’ debtor book;
    • what sort of credit terms are being provided to customers and do they now need to be reviewed;
    • how up to date has the business been with settling its suppliers and creditors; and
    • where are the cash pinch points and when will payments fall due on deferred creditors (like VAT)?;
  • Supply chain
    • how reliable are you suppliers;
    • what are their lead times;
    • have there been any compromises on quality that need to be considered; and
    • what alternatives or back up suppliers are available?
  • Production and processes
    • how have processes and timings changed;
    • are new facilities (storage, skills or machinery) required as a result of different products;
    • has the quality changed (for better or worse); and
    • do these impact on lead times?

Where a business introduces an international element to their business, some of these aspects become more complex:

  • lead times become longer;
  • quality of product or services can be less consistent;
  • communication becomes harder;
  • care needs to be taken to ensure that the numerous and sometimes complex rules and regulations in respect of the movement of goods across borders are complied with and do not compromise the business; and
  • there can be the additional costs associated with foreign currency exchange movement.

Change is rarely straightforward or easy, and now in this period of significant change and refocus, it is important to maintain good lines of communication with customers, suppliers, staff and advisers to ensure that your business runs as efficiently and as ‘lean’ as possible.

If you would like to discuss your business operations and how to make them more efficient, please contact Ryan Hancock at ryan.hancock@hazlewoods.co.uk or 01242 23766.

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Ryan Hancock
Ryan Hancock
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