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Business Optimization: What It Means and Why You Need It: Prof Atul Nayak
Business Optimization: What It Means and Why You Need It: Prof Atul Nayak
Business Optimization: What It Means and Why You Need It: Prof Atul Nayak
When someone mentions the term business optimization, most imagine it refers to
business process optimization used to improve various elements of a business. It's
an activity that often involves procuring the services of a business consultant who
analyzes the business, identifies process issues and recommends changes to
optimize the operation. This procedure, if not carefully managed, often results in
minimal gain and less than satisfactory results because of the difficulty external
consultants have in really understanding a business. This doesn't mean business
optimization doesn't work, nor that it isn't important. Many organizations, especially
manufacturers, have adopted various business optimization techniques such as lean
manufacturing, Six Sigma and the Toyota Way with great success.
Fully perfect
Most effective
Introducing new methods, practices and systems that reduce turnaround time
Reducing all kinds of waste such as wasted time, scrap production and repeat
work.
Most optimization processes start with what's termed low-hanging fruit, which are
changes that are easy to identify and implement, as these early successes boost
confidence. Thereafter, deeper analysis is required to identify and solve more difficult
optimization challenges.
A common example is an organization that has general ledger software for finance, a
payroll system for wages and a separate procurement system for manufacturing.
Each package offers a different view of the organization, and it's not unusual for
information to differ in context, timing and detail. Although IT would almost certainly
have software interfaces that permit a degree of data communication between
packages, these rarely run in real time, are often one-way and don't resolve the
underlying problem of information being held in separate and often incompatible
databases.
The problem with this is that data in separate legacy systems is not accessible to
everyone, nor is it transparent. Most importantly, it's much harder to create a
coherent picture to support data-driven decisions. What's really needed is a solution
such as enterprise-wide ERP that offers one view of the organization. While this is
the ideal, it's not always immediately feasible, and a viable interim alternative is
implementing an integrated business planning solution that extracts information from
legacy systems to present information in a commonly understood format.
In these instances, the costs and benefits of these changes are easy to measure.
The difficulty arises when evaluating complex changes such as the best production
line for manufacturing a product or how to optimize a product distribution network. In
Improved productivity
Less waste
Lower costs
Increased profitability
Added to this are less obvious benefits, such as the development of a culture of
excellence, improved morale and the elimination of organization silos that impede
business operations leading to greater organizational focus. The cumulative effects
of business optimization are such that the business becomes more efficient. In this
context, it's wise to bear in mind the Kaizen philosophy of continuous improvement,
which means business optimization isn't a one-off project, but an ongoing process
that becomes part of the organization's culture. In this way, the business will
continue to move forward, remain viable and outclass competition.