Business Systems
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What are Business Systems?
Business Systems are integrated structures and sets of procedures used to operate the business. These are best created by integrating methods like:
- Business Process Documentation
- Kaizen
- Kanban
- Lean
- Risk Analysis and Mitigation
Table of Contents
An example of planned Business Systems
I explain by example. We have a market garden.
All of the seeds are stored in a cabinet in pouches. Between the eighth and ninth pouch of Grosse Lisse tomato seed is a brightly coloured laminated re-order card.
When the leading hand arrives to collect his seed to pot tomatoes in the glasshouse, he takes the ninth and eighth pouch. He notices the laminated re-order card is exposed, so places it in the labelled re-order tray on the table beside the seed cabinet.
Keri the orders person starts her day with a clean of her desk and immediate environment then goes around the re-order trays gathering cards. These cards define her main task. The card tells her what to order, the number to be ordered, who from and where the stock is stored (cabinet, shelf and tray number).
As she places the orders Keri writes the date of expected delivery on the laminated card using a sharpie pen and delivers the cards to Pete the receiving person. She places each card on a calendar board in the date of expected delivery.
When the order is delivered, Pete places the new stock in the seed cabinet location nominated and places the card between the eighth and ninth pouch as per the number sticker above that tray (in this case eight). If a card is still in yesterday’s slot on the calendar board, the Pete contacts the supplier that morning – hi, I have a missing order, can you give me an ETA please? Should the order be a problem, Pete person returns the card to Keri with a sticky note attached explaining the situation. Wherever the card is, is the action and responsibility.
If the business is larger and more complicated, a roving person (often called a “water-spider” from the old railway gangs or a “gopher”) collects and delivers cards and moves stock as directed by the cards.
Over the season the demand for tomatoes will change. To handle this a Beds Board shows the quantity sold for each week of the past 3 years along with the DTM (Days To Maturity) for that planting (this also changes as the season progresses).
The board provides a guide for how much seed is to be planted, when and where. The stock reserve number may change from eight to say 20 to cover high season demand. In this case a new Re-Order card is printed and the reserve number above the tray is changed. This is a water-spider duty.
Two magnetic buttons are placed on the Beds Board to show that the batch of tomatoes (where, when and how many) was planted and when they are expected to be harvested, and moved to show the status (sewn, potted, re-potted then transplanted).
The harvesting team is guided by a Customers Board showing orders for this week and how many need to be harvested, packaged and delivered to whom. A glance at the Beds Board tells you that there are tomatoes ready and where.
Done properly, anyone can clearly see information for their role and indeed the whole operation – both upstream and downstream.
The other advantage is that it is easy to swap duties for people who know the meaning of the cards. The SOP documentation displays how to do each task, this is displayed at or near each workstation along with the tools for the task.
In a small manufacturer there are 4 people whose role covers some 10 workstations, each assembling a different product. When a batch order is delivered to the workstation, it is placed in a clip which activates a light visible over the shop floor.
Upon completing their current task, one of the 4 will see the light then move to the illuminated workstation, and process the batch. Removing the order from the clip extinguishes the light so the other 3 do not need to prowl looking for work. When the batch is complete, the order card is placed in a nearby tray to direct further action.
The staff are directed by the card and board system not a manager – much more efficient. Anyone who can read can perform the relevant task.
This is a Kanban system tuned to perfection by Kaizen.
Kaizen
There are 3 main aspects of Kaizen. These are:
- Continuous Improvement
- Elimination of Waste
- Standardisation
The History of Kaizen
Post WWII, Japan was a mess, economically, socially and environmentally. A tool was needed to assist them back into stability – a method of improving their business practices to give them a future.
This tool was Kaizen which means “Good Change” or “Continuous Improvement”.
What is Kaizen?
Kaizen was initially developed by the Toyota Corporation as a result of their less than optimum manufacturing practices. Quality Circles were created whereby teams of people were tasked to improve Toyota’s methods. They came up with a system of small incremental changes that when viewed over a longer timescale produced major results. A form of compounding interest for quality of process.
To produce only what is needed, when it is needed and in the amount needed.
Taiichi Ōno – Creator of Kaizen
Gemba
Gemba is Japanese for the workplace.
It has a deeper association with walking the workplace or being in the workplace to KNOW the workplace as a manager. The opposite of the ivory tower mentality.
Continuous Improvement
Constant incremental improvement will quickly boost the efficiency of a business. Thee root concept is that those performing the processes know the most about the processes and are therefore best qualified to suggest and test changes.
A suggestion for improvement is raised in a quality meeting and agreed or vetoed by those upstream, downstream or performing the process. If passed the improvement is tested and may become part of the standard procedures, otherwise not.
Elimination of Waste
Under Kaizen, 7 types of waste are identified. These are:
- Waiting
- Transporting
- Processing
- Inventory
- Motion
- Defects/rework
- Overproduction
Remember that meetings are a waste in themselves unless short and productive.
Standardisation
Standardisation refers to:
- Physical components
- Machines
- Procedures
The advantage is that people and processes are on the same page and all is predictable.
Standardisation is the core of Kaizen and efficient production. Which is interesting for a system of constant incremental change.
Standard process documentation makes it easy for all parties to understand the way the system works and how to discover how new processes are described.
Kanban
Kanban is a broad system covering display boards and cards which signal workflow.
What is Kanban?
Kanban is a Japanese term meaning “Visual signal“. It has two aspects being display boards (summary) and task cards (detail).
Kanban Boards manage an overview of workflow scheduling by breaking each task into components and displaying them on a board. Use the following columns to show their progress:
- Backlog
- Today
- Under Way
- Blocked
- Completed
Kanban Cards manage the detailed aspect of process workflow where cards are used to signal component workflow. They are also key in inventory management and flow.
Lean
Lean is a loosely disciplined philosophy that has recently incorporated elements of Kaizen and Kanban. It predated both by several hundred years but recently has a wider acceptance following global acceptance of the Americanised version of Kaizen.
The History of Lean
Manufacturing has a long history of seeking efficiency but suffers from extreme mental inertia.
The earliest recorded Lean processes occurred in Venice in the 1450s at their Armory. Its popularity was boosted by Henry Ford’s production line systems in 1913. The Model T Ford had only one colour – black – and was very slow to change any aspect of the vehicle. It took Toyota to work out how to provide variety in an efficient production line.
The west has only recently caught on. Elon Musk is the current master of Lean thinking. Tesla has a nearly 15 year lead on all other manufacturers – a gap that will be very difficult to recoup.
Lean has seen a number of iterations among which is Lean 6 Sigma which is an attempt to provide a more rigorous structure.
What is Lean?
Based upon the concept of defining value, Lean is a method of improving the efficiency of any process stream. It aims to eliminate waste that does not contribute to the creation of value. The end game is to create zero waste and perfect value and zero distance to the customer.
It achieves this using components of Kanban and Kaizen.
Standardisation
Standard process documentation enables a business to reduce its training costs and allow staff to be multifunctional. A good understanding of the concepts behind the board and card system is mandatory.
Having said that, the systems naturally move toward simplicity and efficiency.
Risk Analysis and Mitigation
Every business has inherent risks and issues.
The trick is to identify them BEFORE they occur so the response can be predefined, considered and documented. Nobody gains when an unexpected event leaves management running around with its hair on fire. Systems exist to identify risks and their mitigating actions.
Standard Policies and Procedures
The SOP documentation is the true worth of the business. It defines the way all tasks are performed. A decent SOP is the difference between an Infant Business and an Adolescent business. It becomes process dependent which is role based rather than person based. It is that important.
A business with a documented SOP is worth far more than one without. The buyer has a reference point to run the business and time to learn the business before changing it. The absence of a defined SOP creates little more than a non-productive job. You have the need for constant micro-management.
Keep Policies to a minimum – they only end up informing staff how bad they can be before being shown the door. Policy is best stated as “Use your common sense!”.
Successful and sustainable businesses have documented Standard Operating Procedures (SOP) that are readily available to the staff members to reference.
Staff understand the SOP and use them. This gives the owner a chance to work ON the business instead of IN it.
Staff understand their procedures and can perform them without constant direction. You can go away for a time and return to the business to find that it has run properly in your absence. Self management is empowered by documented procedures.
The SOP is a living document – when someone discovers a better way to perform a task, the new procedure is documented after testing and becomes the standard. The relevant staff are trained in the new way and so it goes – classic Kaizen.
Consider this – the time needed to document each procedure is considerably less than the time to instruct staff members each time the procedure is to be done.
Prior to devoting my time to Properly Organic and Designer Acres, I served as a contracted super tech in the bleeding edge of satellite imagery, business management and accounting software, then telecommunication software bringing SMS and Mobile Application Protocol into Australia. I then decided to return to the land. I quickly discovered that apart the shape of the bales and the colour of the tractors little had changed.