This Tuneup Menu is a periodic review of the state of your business with a view to streamlining and removing poor practices that have crept in over time. A good Tuneup will lead you back to best practice, better productivity and higher profits. Yellow Belt
The topic of re-vamping your business is dealt with in a lot more detail in our Double Your Profit in 100 Days (Optimise100) articles
The material below was an early version of Optimise100 which you might, nevertheless, find interesting
Set your goals
It's critically important that you have a clear understanding of what you want to do with this project. This keeps you focused on what you're trying to achieve and will help to have any members of the team and yourself focused on a common outcome. (Goal Setting article)
The steps below are likely to produce many tasks for you to carry out to fine tune your business. The steps in the menu below are ranked in the order thought to contribute most to your results in decreasing order of impact. Within them, there will be many tasks and they should be ranked in (The Amazing 80:20 Rule) order
There will be ample temptation to do several of the tasks below at once to “maximize” your improvement efforts. This will usually reduce your productivity due to the adverse effects of multitasking so take care to avoid that weakness. Much better to work though the most important one to completion first before moving onto the second and so on.
Retune the constraints in your system
Use the methods in (Theory of Constraints (TOC) article) to identify the constraint in your present production systems. This may have moved since you last looked at them and hence the importance of going back to reassess where it is presently located.. Once found, use the methods of elevating and subordinating to improve the throughput of your system.
Having re-optimized for your constraint, has that freed up any underused capacity that thou could sell without increasing your overhead costs and therefore adding to pure net profit.
Sort the wheat from the chaff
The 80/20 Rule says that just 20% of your staff will sell 80% of your sales revenue. Twenty percent of your products make up 80% of your revenue. There are a host of other similar suggestions of how to separate the "wheat" in your business results from all the "chaff" that obscures these vital few. See an introduction in the The Amazing 80/20 Rule Tool and a Menu of 80/20 applications in the 80/20 Rule Menu
Check for over or under production
Check that the production of your system closely matches customer demand. (Cost of over and under stocking article). If it underestimates consumer demand, you are likely to be selling less of your best selling products than you could and so you are missing out on income.
If your production is greater than demand by your clients, you are likely to have an increasing amounts of inventory and work in progress. This is an expensive use of your working capital. Excess inventory should be reduced to free up this capital. You should also give thought to how this build up came about. Likely your production is not tied to customer demand or "pull". You may have moved to local optima (Local Optima Problem article).
You can estimate the cost of lost income and/or of surplus inventory at the Cost of over and under stocking article as well.
Inventory will not only build up at the end of your production system. It will accumulate anywhere production at one stage exceeds that required by the next step downstream. Some inventory may be correctly required for buffers but others stockpiles could be the sign of production out of step with the demand. Local optima (see Local Optima Problem Tool) should be largely removed in favour of filling just demand by using a Kanban approach to manage when products are produced at each stage of your production system
Check your throughput
The goal of Throughput (Throughput Accounting article) is to get the best profitability from your invested capital.
Throughput is only realized when you get the cash at the end of the line. Check that your account receivable processes are effective
Multitasking (Multitasking Tool) is part of human nature and will tend to creep back into any human endeavour. It can be very wasteful. Read up on its cost, how to identify it and steps you can take to remove it then look for these signs in your business.
Accounts receivable health
Throughput teaches us that profit is not realized till the money is actually in our hands. Large accounts receivable are treated as an asset in conventional accounting but that gives a bit of a false sense of comfort. Much better that those outstanding accounts are converted to cash; a better type of asset to have. See Accounts Receivable article for tools.
Seven types of waste analysis
There are seven types of waste that can creep into your business. Run through the list systematically checking for any issues that now arise. See Seven Types of Waste
Risk Management System
Your business will have levels and costs of risk that reflect the sort of industry you are in. You should construct and periodically review a Risk Management System to reduce and manage risk and their costs as best you can. Also take the opportunity to review your insurance cover which is the last defense against some unmanageable risk. See Risk Management Systems article
Other things to consider
Specialization: Especially in small businesses, the comparatively few staff often can, and may need to, do everything. As the business grows, there will be increasing opportunities for the efficiencies that can be obtained through specialization.
See that metrics are producing correct messages. If your systems have got out of kilter since the last time you tuned the business, and you have been watching them, there are probably some wrong metrics or missing ones in the areas that have got out of balance. (Metrics article)