The first step in any improvement project is to measure current performance; studies have shown that the mere act of measuring performance can increase efficiency by over 20% even in the absence any follow-up activity. (Hawthorne Effect)

By replacing opinions with facts you clarify priorities and drastically reduce the amount of management time spent debating alternatives.  Without some metric for your current performance it's difficult to determine where you should focus your improvement methods. 

Finally, if you don't measure performance over time you can't be sure whether your actions are really making things better. 

Yet, despite all these seemingly obvious truths, many small and medium sized distributors fail to adequately measure basic operational performance.  Most companies have reams of data but very little real information. 

The challenge in performance measurement is usually not collecting enough data but in ensuring that the resulting metrics are simple, clear and accurate.  It's often much harder to get a single value for, say, inventory performance, than to have 10 pages of statistics. 

Prioritizing Improvements

After you've identified a set of candidates for improvement it is tempting to attack many of them at once.  However, experience shows that attempting to address more than a few major problem areas at the same time can be ineffective and even counterproductive.  Most organizations don't have extra staff just waiting around for more work, especially the very talented people that you need to tackle a new initiative. 

This means that any new initiative will detract from your day-to-day business or other concurrent initiatives.  Finally, companies often find that, after correcting primary problems, the secondary problems are completely different from those identified in the original analysis. 

Designing Solutions

There are a variety of sound methods for designing solutions to operational problems.  The single most important element of solution design is to clearly define the underlying problem.  It usually helps to state the problem or issue in a single sentence so that your entire project team has the same level of clarity on the issue.  Start with brainstorming for solutions. 

Brainstorming is a way of leveraging the creativity of a team to get better ideas.  It is most powerful when the following guidelines are followed:

• Use a knowledgeable facilitator who is not directly involved in the process being discussed.
• Create a list of different considerations or aspects of the problem to stimulate thinking. 
• Allow no criticism (even mild or joking) of any input.  There are no bad ideas. 
• Let ideas build on each other – this is the power of the team participation. 
• Take a short break after the idea generation session before proceeding with qualifying the ideas.  But be sure to qualify ideas during the same meeting into those which are clearly ineffective or undesirable, those which are clearly effective and desirable, and those which require further investigation. 

Revisit Best Practice. Simply stated, "best practices" are business operations that are commonly used by financially successful companies.  The identification and study of best practices is now widespread and has contributed to significant operational improvements in many industries.  This powerful tool originated from a simple, almost obvious premise: at some level, most business organizations do the same things. 

Therefore, by examining those organizations that do these common processes extremely well, we can quickly find ways to improve our own business.  Significantly, best practices offer a way to learn from any organization in any industry, provided that both organizations share a "common process."  Here are some guidelines to using best practices effectively:

• Remember that they are only correlated with good performance – be sure to use them as ideas for solutions rather than relying on them to fix problems that are specific to your company.
• Good sources for best practices include the industry press, trade associations, peers in other markets, information from suppliers and customers, and general business literature. 
• Never blindly adopt a practice, even from a direct competitor, until you know exactly how it will work in your organization. 

When managers do not envision the relationship between management practices and front-line actions, the business is not focused on meeting today's customer demands for service excellence.

Further, management can not take appropriate steps to support and train personnel when they do not understand the need for the right support and training, thus core measures of business success can suffer.

Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com.  Don't forget to check out the Lead Wolf Series that can help you put more profit into your business. 

www.ceostrategist.com