Archive For December 18, 2016

Suffer Boredom to Save Your Bottom Line

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Every businessperson knows that one’s company cannot operate indefinitely in “deficit mode.” Managing expenses to ensure they do not exceed income involves contract compliance.

Of the many aspects of contract compliance, the most obvious concerns vendor management. To that end, many companies conduct vendor audits to mitigate exploitation of the supply chain. Dishonest vendors pose an enormous threat to their clients: expensive fines for fraud and improper payments, loss of consumer trust, and loss of major contracts just to name a few. In order to prevent such losses, companies undertake vendor audits as part of wider compliance programs. Sure, such audits can be time-consuming and expensive, but isn’t it more costly to lose business and then have to try to win it back?

Vendor audits involve periodic reviews of vendors as a part of the company’s internal controls. These should occur whenever a new vendor is brought onboard or when a vendor contract is being considered for renewal. Check out vendors’ compliance with pertinent legislation and ensure–for contract renewals–that the vendors have fulfilled the clauses of their contracts with your business. This review may also shed light on obsolete contract clauses that should be eliminated from future contracts and additional work the vendor performed for your company that was not included in the contract.

The vendor audit may involve analysis of financial transaction and records, samples of high-risk transactions, review of the vendor’s documents and policies, and interviews with the vendor’s senior personnel. The review may reveal warnings that should trigger close scrutiny: advance payments, unjustified costs overruns, requests for additional payments, invoices without details, payments to offshore accounts, changes in the quality of materials or products provided.

A bit less obvious, contract compliance concerns operations and delivery management. The process behind administration of business practices should create efficiency and improve productivity. This may involve determining the size of manufacturing plants or the number of skilled personnel for optimal operation. It includes managing inventory, project schedules, materials acquisition, quality control, and maintenance policies. This entails determining who does what, when, and for how long. If your contract specifies that two of a certain category of employee must be used for a particular project and experience shows that three employees of that category are necessary, then it’s past time to adjust your expectations and your contract.

One such result of the analysis of goods and services is the conversion of offering services as packaged products. Take advertising, for example. A firm might sell content development, graphic design, film production, and so forth on an à la carte basis, which risks losing the client at any one of the stages of the project to a competitor. Or a firm might put together a package deal that offers standard services and promises a predictable product, say an ad in one of three specified publications, a TV advertisement, a certain type of online campaign, etc. The package deal, because the company can integrate the services, then costs less overall than the à la carte option.

Review your contracts to be sure that you are providing the services for which your clients are paying and that your vendors are providing the services you hired them to do. Discrepancies indicate mismanagement and should be corrected so that no one wastes time providing unnecessary services or delivers services for which they will not be paid.

It’s the nature of business: we don’t work for free. Develop a process that incorporates a routine review of your contractual obligations to be sure that the work matches the need and that compensation is fair.

The Heggen Group specializes in developing such processes. We can analyze your business and help you craft operation and delivery processes that will help you to manage your income and expenses.

 


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Enterprise Transformation Begins with a Plan

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To say that change is a way of life is to parrot an oft-mentioned truism. The question is not whether change will come, but how you will deal with it. The impact change has on your business can be guided and manipulated, but only if you have a plan.

In his article “Do You Begin an Enterprise Transformation with the Business or with IT?” Mark Edmead observes that organizations shift their core structures and operations in response to their relationship to the wider economic environment. In order to manage the progress of change and its effect, a business benefits from having a robust process to draw order from discombobulation. In short, change is scary. However, if it can be managed, then fear and uncertainty fade and your team can forge ahead, recognizing and capitalizing on the new opportunities that change brings.

The process for adapting to change beings with a blueprint of the organization’s current structure and operations, because you can’t manage what you don’t know. This baseline documentation helps to determine what operations can adapt most quickly, what will need to be added, and what will have to be jettisoned. Of course, not all change can be predicted: No one in the 1950s could have dreamed of the technological advancements of the past 20 years. However, most changes occur incrementally and can be predicted if only management pays attention.

Once the blueprint is in place, it’s time to determine where you want your business to go. In part, the where determines the how: How will your business get there? Make no mistake, this will involve technology.

Both the catalyst and the bane of modern business, technology grows, transforms, adapts, and metastasizes. Like a cancer, it has invaded every part of business operation and, like air, becomes the very breath of business. Unless you’re living in a stone age cave, you need technology to thrive. Technology, like nature, evolves. Most evolutionary advances can be predicted and occur incrementally. The Microsoft Windows(c) operating system revolutionized the way people interacted with their computers. It didn’t change the nature of the tasks for which people used them: number crunching, word processing, graphic design, etc. Then Android came along and cell phones quickly turned into mini-computers and internet devices. Cell phones, still used for placing and receiving calls, adapted to new uses.

The changes over the last 20 years, however, could be predicted, which businesses could plan for them. They could figure in the costs of adaptation and adoption and reconcile that with the return on investment in terms of efficiency and productivity. Your process to guide you from current operation to future practice should consider that not all necessary changes will yield a discernible profit. Some, in fact, may serve as cost centers rather than profit centers.

Ron Miller’s article “The Enterprise Transformation Conundrum” opines that change more often than not is driven upward from the lower ranks. C-suite decision makers won’t be persuaded to make a change for it’s own sake; the change “has to drive real business value, help sell more products, get customers more interested and have a measurable impact on the bottom line.”

The best way to ensure that change yields positive benefits for the business is to plan for it, show how it can be incorporated without breaking down the workforce and emptying the bank. Buy-in from management won’t come easily. They know that real innovation involves failure; however, these are the very people who are the most risk averse.

In order to negotiate a process that incorporates change, Miller advises, “start small and build a body of work.” Small successes will build to greater ones as management witnesses that change can bring not only opportunity but more success.
The Heggen Group helps organizations manage change through a navigable process that guides successful implementation. Contact us to learn how to plan for and manage growth.

 


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Improving Business Through Process

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Like many things in life and work, gratitude arises from a process and proceeds according to a process, even though we may be unaware of the process behind the expression. The process of gratitude cannot be easily codified and takes self-discipline, because you can’t delegate any of the responsibility. You must hold yourself accountable.

Living in a state of gratitude means affirming the positive. It means living with an expectation that good things will happen, even when misfortune appears to hold the upper hand. Monte Farner and Amy Zerner’s article, “On Gratitude“, states: “Being grateful puts you in the perfect frame of mind for using our affirmation and visualization techniques, designed to help you manifest what you want. Express gratitude for all that you have, both the good and the bad. Doubts will impede your intentions, but when you are thankful and feel fulfilled, your goals will manifest much more easily.”

Gratitude may seem more of an art than a process, because so many people approach it in so many different ways. Some maintain lists of all the small mercies for which they are grateful. Other practice daily meditation and affirmation techniques. Still others simply rely upon their faith to find the strength and grace to live in gratitude. However you do it, an attitude of gratitude prevents despair when all the world seems to be gunning for your abject failure. Helen Russell’s article “How to Start a Gratitude Practice” outlines her process for living a life of gratitude: “commit, begin, write it down, feel it, choose a set time, practice present-moment gratitude, share the gratitude, don’t stop once you start to see results, and allow yourself to be human.”

Perhaps the greatest gift manifested by gratitude is peace achieved through forgiveness. We all make mistakes. Most errors don’t threaten that which is sacred–life–and can be fixed. Even those that cannot be fixed should not condemn us, for they grievously hurt those who err, too. Forgive, affirm, be grateful, find peace.

The rest is all worldly trappings. When you are imbued with gratitude, you will find a measure of serenity that enables you to take the necessary step backward to analyze what’s wrong and to take the necessary steps to fix it without crushing the good work and morale of others. Simply put, your gratitude should foment the gratitude of your family, friends, and colleagues–that’s the sharing part of Russell’s process. Those whom you support in such a manner will return that gracious toward you in spades.

At this time of year, we reflect and are grateful for the opportunities our clients extend to us to improve their businesses, because it is our practice to share the processes that make gratitude possible.

 


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