Have you ever watched one of those Cookery programmes on TV? These shows tend to focus on preparing dishes for a specific purpose, e.g. a dinner or party menu or, they focus on creating a number of dishes using a specific ingredient or device, e.g. Beef dishes or a range of dishes that can be prepared on the BBQ.
In all cases, they take the viewer through a series of mouth watering steps and end up with some very tasty looking creations.
So what has that got to do with you and how you manage your business?
Let’s walk through one of these cookery programmes.
Regardless of whether you are watching Rachel Allen, Jaimie Oliver, Gordon Ramsey or Bobbie Flay, all of these programmes follow the same process; they begin with the end in sight. At the start of each programme, you are told what these TV chefs intend to create. So before they begin, they already know their end goal. In business, as a manager or owner, you should always know what your end goal is.
What are you seeking to achieve from your actions today?
If you can’t answer that simple question, then why are you taking the actions?
I have never seen a TV chef start a programme scratching his/her head, looking blankly at the camera and saying, “Hmmm, I think I’ll make, ehm, well let’s just chop this and we’ll see…” So our chefs know exactly what they are going to do, before they start. On top of that, they hvae developed a strategy for how they will achieve their outcome. What else can we see?
One thing I notice is how everything the chef needs is ready for use; the meat, fruit, vegetables, spices and other ingredients are all measured out, within easy reach and ready for use. Also, the tools and equipment are clean and ready for use when needed, i.e. they are prepared. They know that they have the materials and equipment they need so when they start, they know they will be able to complete the task.
So, our celebruty chefs know what they want to achieve before they start and that allows them to gather the equipment and materials they will require that will help them to achieve their goals.
In Business, there have been numerous moves to achieve these techniques, but in the commercial world we don’t call it cooking. Instead, we use terms like ‘Demand Pull’ to signify a system where the end goal (customer demand) ‘pulls’ materials through a production and supply process. We use terms like Lean & Agile production or KanBans to signify ‘having what we need ready when we need it and in the quantities we need it’. Unfortunately, many companies see these commercial terms as distant dreams, unobtainable or “only for the big guys”. But if we see things more simply, are they really that much out of reach?
I must admit that I like cooking & baking and I regularly use a baking analogy to help students grasp the concept of more commonly used business terms.
Suppose you are inspired to create a special cake for that someone special in your life. Chances are, you have a cookery book by one of the celebrity chefs you have seen on TV. So your end goal is a beautiful cake, i.e. your production output to meet your customer’s (that special someone’s) requirement. What do you do next?
You probably find the recipe in a cookery book. But what is a recipe? It’s a list of ingredients that need to be combined which, if done correctly, will result in the cake you want to produce. In Business terms, the recipe is a Bill of Materials (BOM) that will be needed in order to achieve the output. Because this Bill of Materials tells you exactly what you need to produce a single output, it is a Lean process that, if followed correctly will result in no waste and has a ‘Right First Time‘ approach. One other thing, your recipe will tell you what equipment you will need, e.g. weighing scales, pots, cake tins, oven temperatures and cooking times, etc. In other words our cooking metaphor is helping your formulate your Manufacturing Resource Plan (MRP2). Finally, your recipe also gives you the sequence of steps required to make your cake, i.e. your Master Production Schedule (MPS).
So you know what you want to produce, what equipment and materials you need to produce it, the sequence with which to carry out the tasks. In business terms, you know the Actual Orders, the Materials Requirements, the Manufacturing Resources needed and the Master Production Schedule, all from a recipe in a cookery book!!
Do you see how Life imitates Business?
Do you see how you don’t have to be a Global company to understand (or experience) the key concepts of business organisation and to apply global concepts of business such as Lean principles, Production Planning, etc?
Let’s continue with our cake.
So, you have checked the recipe in the book. You have checked that you have the pots and pans needed. What’s next?
Well for me, the next step is to see what ingredients I already have and, which ingredients I will need to buy. Lo and behold, we are conducting an Inventory check. A warehouse doesn’t have to be a big industrial building with forklifts and racking. In the home, your warehouses are the presses (or larder) in which you store the food you eat. You even have specialist warehouses in the form of a Fridge and Freezer!
Based on your inventory check, you draw up your shopping list. In business terms, you develop your purchasing plan from your Materials Requrement Plan (MRP).
Now we are into the function of Purchasing, having started our journey in Sales & Marketing (deciding on which cake to bake), Planning – in conjunction with Production (to decide on the materials required, check available capacity, equipment and time) and Warehousing (to check our inventory situation). Regardless of the size of your business, you have involvement in each of these functions. I think the biggest mistake smaller business owners make is to fail to recognise the fact that they work in these areas. In larger organisations these functions are seperate and have teams managing them, whereas in smaller businesses all of these functions may fall to one person. Recognising the different facets of operations can help smaller business owners to maintain the focus they require to apply the same techniques as the larger organisations they may be jealous of.
So, back to our story and, what does Purchasing do?
Purchasing is the function responsible for sourcing and buying the materials required to ensure the company can produce its products and services. In our cake analogy, we know the ingredients we need. A check of the presses or larder will tell us what we have (or have not) from the required list. So in essence, we have conducted a GAP analysis to identify what we need to buy.
When you are looking to do your grocery shopping, why do you go to one supermarket instead of another? Do you order on line and have your groceries delivered or do you go and collect them yourself? How does grocery shopping relate to a business concept? Well, Purchasing is faced with the exact same thought processes every day as part of its role. Why does a Purchasing manager buy from one supplier over another; price, quality, service, availability of stock? Most companies have their orders delivered, however, in a effort to reduce costs and increase efficiencies, many are now looking to see if they can get one of their trucks call and collect purchased materials on route back to the factory. This reduces the cost of materials (by taking out the supplier’s delivery charges) while increasing the utilisation of vehicles that may already be on the road running with capacity to carry materials. The concept is known as Factory Gate trading. By deciding to collect groceries from a supermarket you are applying this very concept (you are not paying the delivery charge and may already have your car on the road as you travel from work).
So now you have all the materials you need to bake that special cake. You plan your production so that you will get the cake completed within a specific time and in advance of when you need it (exactly the same as in every production company on the face of the planet).
As you can see, you apply complex business techniques in your life. So why are they so difficult to apply in your business? You don’t buy a catering pack of flour when all you need is enough to bake a cake, so why do busines owners lose the run of themselves and blindly buy in bulk “to get a great price”, much of which ends up being written off.
Why do we confuse ourselves with the complexity of the fancy terms and concepts we come across in business when, in reality, they come naturally to most of us in our everyday lives?
Why do we not see how the planning and preparation of the cookery programmes we watch on TV can be applied to our own businesses, regardless of size or product?
Business is easy. It’s the people working in it who make it difficult.
Dumb it down and be successful!!!