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Improving processes is one of the most effective methods to speed up productivity and cut costs in any business. If you improve a process by just 1% consistently, those small gains will add up to major improvements.
This process is called the principle of 'aggregate marginal gains,' and it emphasizes small continuous improvements that can over time add up over time. These improvements can amount to something significant, whether you’re an Olympic cycling coach or work in the industrial distribution business.
In 2003, British cycling coach Dave Brailsford took on a difficult challenge. Brailsford was hired to lead the British cycling team in the Olympics, but the team had not managed any significant wins before he was brought on board. That trend changed when he led the British cycling team to seven out of ten gold medals at the 2008 Beijing Olympics.
How did Brailsford manage to drive so much success? In an interview with Harvard Business Review in 2015, Brailsford said, “It struck me that we should think small, not big, and adopt a philosophy of continuous improvement through the aggregation of marginal gains. Forget about perfection; focus on progression and compound the improvements.”
The team looked for areas that could possibly affect a cyclist's performance and created a plan of improvement. For example, they evaluated the mechanics area and found that dust had been accumulating on the floor, weakening bike maintenance efforts. They also invested in special trainers who helped the team understand how to improve their cycling techniques. During competitions, they brought their own mattresses and pillows so athletes could sleep in the same position every night.
These are just a few of the improvements made by the team, but they make an enormous difference when you put all the small improvements together. After just five years under Brailsford's leadership, Britain dominated Olympic cycling from 2008 through 2012.
Cyclists aren’t the only people who can benefit from aggregate marginal gains. Imagine if you could improve your business just 1% a day. As an industrial distributor in the fluid power, motion control, hose and accessories, and engineered products industries, the challenge is examining which areas of your operations or business processes are mission critical and determining any inefficient processes that could use improvement. Improving can be challenging.
It requires:
In an example by Douglas Wick on the Strategic Discipline blog, he cites the seven key areas companies can influence to impact cash flow by improving just 1% over a given period.
Wick also shares a formula for determining the effectiveness of the 1% improvement process.
Implementing a continuous improvement mentality has been proven to be successful in many areas of business operations. Did you know:
Dovetailing on the seven key areas mentioned by Wick, here are some additional KPI’s you should be keeping an eye on and taking the initiative to make that 1% continuous improvement.
While continuous improvement is ideal, it does create a new challenge – managing growth. As your industrial distribution business makes continuous improvement, you’ll need to have a plan in place to handle higher transaction volumes, process more sales orders, pick added inventory, and manage new customers. It’s a good challenge to have, but a challenge, nonetheless.
Simply put, it’s not easy managing a distribution company, especially when you reach exponential growth. The good news is that there are resources available to help you enable continuous improvements while running your business more efficiently.
ERP software is one major tool to help distributors embrace continuous growth and streamline their operation. Integrating your business functions and processes into a unified platform across every department gives you a high-level view of how your business is performing across several key performance indicators (KPIs). The right ERP software can also provide your organization with feature-rich tools that help small and medium-sized businesses improve business processes and increase profits, including:
The bottom line is that a 1% improvement can positively impact your industrial distribution processes and operational efficiencies. Better yet, the TrulinX Software System makes it quite easy to obtain.
TrulinX helps industrial distributors and fabricators increase efficiencies, track costs, as well as provides the ability to forecast your operation's future performance. TrulinX is designed for today’s business environment – flexible enough to adapt as your company grows and customizable so that it fits perfectly into any industry or vertical market.
With TrulinX, you can also take advantage of our world-class customer service and focused implementation process. Our team of experts will collaborate with you from start to finish to ensure a smooth implementation process that is tailored to meet your specific needs.
Ready to improve your organization through innovative ERP software?
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