boost your business - ipex
TRANSCRIPT
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CAVENDISH
`BOOST YOUR BUSINESS!`
COLIN THOMPSON
IGNITING YOUR BUSINESS
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CAVENDISH
`BOOST YOUR BUSINESS`
By
Dr. COLIN THOMPSON
Improving the quality of your people and business systems is necessary to acceleratewith impact organisations in the 21st century. The competition for customers is gettingfierce. Customers want and expect much more from company personnel and theirsystems. This publication will help you to improve your skills in empowering people todeliver quality business excellence by using `management techniques` to raise the`bottom-line`.
This publication will help you understand how using `management techniques` can affectyour business globally and also impact an increase in the `bottom-line`.
Businesses that invest in people and systems will `win`, because they care more thanother organisations. Each company should care about its personnel and businesssystems. The world is about dedication to the people and business models environment,since it is people and business models that make companies work, technology only helpspeople and the business models carry out their jobs more efficiently.
Becoming the best, so to `accelerate with impact your business growth`, I have set outto fulfil several objectives;
* To remind Directors/Company Owners of some of the basic principles that you need toinvest in management techniques and business models.
* To establish a framework for the detailed review of all aspects of the day-to-dayoperations of the business, leading to the identification of problem areas and thedevelopment of action plans to improve performance and accelerate with impact thecompany.
* To establish guide lines and methods of planning to ensure the long - term growth andprosperity of the company and for the company to stay in business longer because of thequality of its people and business models.
The accent throughout is on common sense and simplicity, with an avoidance ofmanagement gimmicks and minimum use of jargon.
Business life is about dialogue that we `all` understand and respond to. So make theplaying field equal, so all people understand the language used and the action to take, toreceive and accept, so business life is successful for `all` involved.
Yes, you can achieve all things in life by your attitude to be positive, you have thesolution in you, so go forward and use it now and be successful in your business growthby using `management techniques` to `Boost Your Business`.
"Only one yardstick could be selected for the measurement of business progress, it mightwell be the business document; in this day and age every business is erected on a
foundation of paper"Edward N. Rausch
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`BOOST YOUR BUSINESS`
BY
Dr. COLIN THOMPSON
CavendishKings CourtBirminghamB28 8JGUK
Telephone: + 44 (0) 121 244 1802Fax: + 44 (0) 121 733 2902email: [email protected]: www.cavendish-mr.org.uk
© Copyright 2010 Colin Thompson
First Edition 1984
The material contained in this report is set out in good faith for generalguidance and no liability can be accepted for loss or expense incurred as aresult of relying in particular circumstances on statements made in the book.The Laws and Regulations are complex and liable to change, and readers shouldcheck the current position with the relevant authorities before making personalarrangements.
"The greatest pleasure in life is doing what people say you cannot do."
Walter Bagehot, British author, economist (1826-1877)
PROVIDING THE SOLUTIONS FOR SUCCESS
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PROFILE
COLIN THOMPSON
Colin Thompson has over 30 years experience as Managing Director. His careerto date has given him a complete exposure to business management andmanagement of people. He has wide experience in PLC and private companies intop level management of increasing sales/profit. Also, turnaround and re-engineering experience linked to new corporate identities and successfulmergers/take-overs. Plus, developed many business models to increaseprofitability and the retention of employees, customers and suppliers.
Technical skills/knowledge
Directorships
ChairmanManaging DirectorDirector-Print Management and Workflow SolutionsDirector-Operations/Customer Service and MarketingDirector-Financial and AdministrationNon-Executive Director
Former Group Chairman of The Academy for Chief Executives
Initiated New Corporate Identities, also Managing Director:
Datagraphic Inc. UK, division of USA GroupForms UK plc (now etrinsic plc), division of InnerWorks Inc. USAWH Smith PLC - Business Services division, Print and DistributionKenrick & Jefferson Group LtdMail Solutions Group Ltd, division of SSWH PLC
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Able to successful bring new Products and Services to market i.e.
a) Set up new UK `green field` manufacturing/distribution/workflowsystems organisations and market new Products and Services.
b) Research, development and design of a Print Management Service,including writing a book `Print Management and Workflow Solutions`,plus many other publications and business models.
c) Produced CD-ROM `Interpreting Accounts for the Non-FinancialManager`- adapted from my two-day course for Anderson’s-CharteredAccountants for their clients. Plus other business and education modelsto increase productivity, retention of customers, employees andsuppliers that increased net profit and cash flow.
My training and knowledge has enabled me to take an overall view of anorganisation, its operations and strategy. Also, to understand with a degree ofcompetence in a wide variety of business skills and functions. I have dealt withchallenges at a high level of complexity, especially those that cut across thecommon functional divisions of business. Developed several business models toraise the `bottom-line`.
Education: BA, MBA, DBA, CPA, FFA, MCIPD, MCIJ
My experiences and knowledge have enabled me to write and have publishedover 400 articles, several books, guides, research reports, and severalCD’s/Software on business and educational models plus speaking atInternational Conferences and Visiting University Professor.
DDL: + 44 (0) 121 244 0306Mobile: + 44 (0) 7831 588310Main T: + 44 (0) 121 244 1802email: [email protected]: www.cavendish-mr.org.uk
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`BOOST YOUR BUSINESS`
`Management Techniques to Increase the `Bottom-Line`
Improve Profitability – Increase Productivity – Control Costs – Plan Effectively –Organise Efficiently, are all needed to be successful in business. The provenmethods contained in this report will help all Directors/Company Owners andManagers to improve efficiency and effectiveness in the business environment.
Management techniques are the systematic and analytical methods used by Directorsand Managers to assist in decision making, the improvement of efficiency andeffectiveness, and in particular the conduct of the two key managerial activities of`planning and control`. Areas of management such as corporate planning, marketing,management accounting, cost management and operational research make considerableuse of related techniques may be termed `disciplines`.
Techniques, used individually or grouped into disciplines, should be distinguished from:
Managerial Skills such as co-ordinating, delegating, communicating, negotiating andinterviewing, which rely upon personal expertise developed by experience and training.
Procedures which consist of the various administrative tasks, systems and guidelinesneeded to get the work done; the way in which sales orders are processed is aprocedure.
Activities/functions in which various administrative tasks are carried out and skills andprocedures used in order to achieve a desired result; for example, job costing, costcontrol, advertising, recruitment and selection or purchasing.
In each of these areas of skills, procedures and activities, management techniques playan important part, either generally in helping to solve issues, or particularly by enablingfunctions to be processed more effectively.
All management techniques are systematic and analytical. Quantification plays animportant part in many techniques, and all techniques attempt to be objective or at leasttry to minimise the amount of subjectivity in decision making.
Benefits
Management techniques provide a foundation for improved managerial performance.Their main strengths lie in their systematic, analytical and in many cases, quantifiedbase. They operate by means of a continuous cycle of gathering and analysing `factualdata`, formulating issues, selecting objectives, identifying alternative courses of action,building new models, weighing costs against performance and benefits and monitoringperformance to point the way to corrective action and improvements.
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The `value` in all these respects is undeniable, but a word of caution is necessary.Techniques are only as good as the `people` who use them. Quantification is fine, but ifit is based upon doubtful assumptions, it can result in ponderous edifices being built onsand and collapsing when the sand moves and can no longer bear their weight.Techniques such as investment appraisal and risk analysis will put executives into thebest position possible to determine where they are going, but judgement is still required.Management techniques can help Directors/Company Owners and Managers to makebetter decisions, but can never replace `good judgement`, which is the hallmark of thesuccessful trained executive.
Profitability Analysis
Profitability analysis classifies measures and assesses the performance of the company interms of the profits it earns in relation either to the shareholders` investment or capitalemployed in the business, or in relation to sales. Profit can also be defined by thefollowing equation;
Profit = Increases in owners` claims = Revenue – Expenses = Increase in net assets.
Classification of Profits
There are four headings under which profits are classified;
1) Gross Profit. The difference between sales revenue and the cost of goods sold.This is also referred to as `gross margin`, especially in the print sector.
2) Operating or Trading Profit. The gross profit less distribution costs, administrationcosts, research/development and marketing costs.
3) Profit before Taxation. Operating profit plus investment income minus interestpayable.
4) Net Profit. Profit before taxation minus corporation tax.
Measurement of Profitability
Profitability is a measure of the return in the shape of profits that shareholders obtain fortheir investment in the company. It is expressed in the form of the following ratios;
1) Return on Equity
This ratio shows the profitability of the company in terms of the capital provided by theowners of the company, i.e. the shareholders. The formula for this ratio is;
Profit after interest and preference dividends but before tax and extraordinary itemsAverage ordinary share capital, reserves and retained profit for the period
x100
This ratio therefore focuses attention on the efficiency of the company in earning profitson behalf of its ordinary shareholders. Many analysts regard this as the basic profitabilityratio.
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2) Return on Capital Employed
The return on capital employed ratio aims to provide information on the performance of acompany by concentrating on the efficiency with which the capital is employed. The basicformula is;
Trading or operational profitCapital employed x100
The profit figure taken is the one, which reflects the ordinary activities of the companyand excludes the effects of any extraordinary items. Interest charges are not deductedbecause, assuming the capital employed represents the total assets of the company, itwill be partially financed by creditors, and the profit figure should therefore be theamount before any interest payments to those creditors are made. Taxation charges arealso left in the profit figure because the amount of taxation paid by a company dependson a variety of circumstances, which may not all be under the control of the company.The interest paid on current liabilities, or received on current assets, is also included inthe calculation of profit.
Capital employed is usually taken as either the total assets of the company, i.e. fixedassets plus current assets or the net total assets, i.e. fixed assets plus current assetsminus liabilities. Use of the total assets figure focuses attention on the efficiency withwhich all the resources available to the Directors/Managers of the company have beenutilised, and this is the basis which is referred to most frequently. The argument forusing `net total assets` is that these are the resources which are most under the controlof the company and any distortions caused by variations in working capital policy will beminimised.
The alternative formulae are therefore;
1) Return on Total Assets
Trading profit before interest, taxation and extraordinary itemsAverage total assets for the period x100
2) Return on Net Total Assets
Trading profit before interest, taxation and extraordinary itemsNet total assets for the period x100
Earnings per Share
Profit after interest. taxation and preference dividends but before extraordinary itemsThe number of ordinary shares issued by the company
This widely used as a variation on the return on equity indicator of profitability. Itsdisadvantage for inter-company comparison purposes is that the earnings per shareclearly depend on the number of shares issued, which has nothing to do with profitability.Similarly, comparisons over a period of time within a company will be affected if anybonus share issues have taken place.
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Price-earnings (P/E) ratio
Market price of ordinary shares/price at the time (private company)Earnings per share
It reflects the expectations of the market concerning the future earnings of the company(market price), and the earnings available for each ordinary share, based on the resultsof the most recent accounting period.
If the market price is £5 per share and earnings per share are 50p, the price/earningsratio is 5.00 divided by 0.50=10. This means that, if £5 is paid for a share, then theshares are selling at 10 times earnings, i.e. ten years of current cost earnings at 50phave been bought. For comparison purposes, companies with higher P/E ratios areregarded as having better prospects.
Return on Sales or Profit margin ratio
The return on sales or profit margin is a `key` ratio. It shows how well the company isdoing in maximising sales and minimising costs.
ProfitTotal Sales x100
This ratio therefore expresses the profit in pounds generated by each pound sales. Theprofit figure used is generally, but not always, the trading profit before interest, taxationand extraordinary items as is the case in the formulae for return on capital employed.
Asset Turnover ratio
Although a much used ratio, the return on sales may be misleading because it fails totake account of the assets available to achieve the profit margin. It can be used inassociation with the return on capital employed, but the issue here can also be overcomeby adopting the asset turnover ratio.
Total SalesAssets
This ratio expresses the number of times assets have been `turned over` during a periodto achieve the sales revenue. It measures the performance of the company in generatingsales from the assets at its disposal.
Ratio Analysis
Ratio analysis studies and compares financial ratios, which identify relationships betweenquantifiable aspects of a company’s activities. The object is to reveal factors and trendsaffecting performance so that action can be taken.
Types of Ratios
1) Profitability2) Performance3) Cost4) Liquidity5) Capital Structure6) Financial Risk7) Efficiency-Debtors, Creditors, Inventory8) Productivity
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Profitability
1) Return on Equity
Profit after interest and dividends, but before tax and extraordinary itemsAverage ordinary share capital, reserves and retained profit for the period
2) Return on Capital Employed
Trading or Operating profitTotal assets (fixed assets and current assets)
Or
Trading or Operating ProfitNet Total Assets (fixed and current asset – current liabilities)
3) Earnings per Share
Profit after interest, taxation and ordinary dividends, but before extraordinary itemsThe number of ordinary shares issued by the company
4) Price/Earnings (P/E) ratio
Market price of ordinary sharesEarnings per share
Performance
1) Return on Sales or Profit margin ratio
Trading or Operating profitTotal Sales x100
2) Asset Turnover ratio
Total SalesAssets
The asset turnover ratio can be divided into;
Sales
Fixed Assets, which is subdivided into;
a) SalesLand and Buildings
b) SalesPlant and Machinery
c) SalesVehicles
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SalesCurrent Assets which is subdivided into;
a) SalesMaterial Stocks
b) SalesWork-in-Progress
c) SalesFinished Stocks
d) SalesDebtors
Cost
Overheads
OverheadsSales x100
Functional or Departmental cost ratio
Production cost of salesSales x100
Which is subdivided into;
a) Cost of MaterialsSales value of production x100
b) Works labour costSales value of production x100
c) Other production costsSales value of production x100
Distribution and Marketing CostsSales x100
Administration CostsSales x100
Payroll CostsSales x100
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Cost per unit of output
Where it is possible to measure outputs in units, the cost per unit of output provides along measure of productivity as well as cost control.
The formula is;
Production costsOutput in units
Liquidity
The two main liquidity ratios, which establish that the company has sufficient cashresources to meet its obligations, are;
1) The working capital ratio (current ratio)
Current assetsCurrent liabilities
2) The quick ratio (acid-test ratio)
Correct assets minus stocksCurrent liabilities
Capital Structure
1) The long-term debt to equity ratio (the gearing ratio)
Long-term loans plus preference sharesOrdinary shareholders` funds x100
2) Long-term debt to long-term finance ratio
Long-term loans plus preference sharesLong-term loans plus preference shares plus ordinary shareholders' funds x100
3) Total Debt to Total Assets ratio
Long-term loans plus short-term loansTotal Assets
Financial Risk
Financial risk ratios measure, primarily for the benefit of shareholders and investors. Therisk of dividends or interest payments not being adequately covered by the earnings ofthe company.
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The main risk ratios are;
1) Interest cover
Interest cover ratios focus attention on the relationship between interest paymentliabilities and the profits or cash flow available for making these payments, thusproviding an alternative way of analysing gearing. They show the number of timesinterest is `covered` by profits or cash flow and therefore indicate the risk of non-payment of interest.
Interest cover ratios in two forms;
a) Profit before interest and taxGross interest payable
b) Cash flow from operations before interest and taxGross interest payable
Profit provides the overall measure of ability to pay, but as interest has to be paid out ofcash, the cash flow ratio is perhaps more significant.
There are no optimum ratios, which are generally applicable. It depends on thecircumstances of the company although any company would be in a really bad way if itcould not cover interest by profits or even cash. The more profits or cash flows fluctuate,the higher the ratio should be. For profits, a two times' cover is fairly satisfactory instable conditions. For cash flows, a four times' cover is quite healthy.
2) Dividend Cover
The dividend cover ratios examine the amount by which profits could fall before leadingto a reduction in the current level of dividends. The dividend ratio is calculated as;
Profits available for paying ordinary dividendsOrdinary dividends
If ordinary dividends are covered, say, three times (a reasonably safe position), thismeans that profits could be three times less than they were before there would beinsufficient current profits to pay the dividend.
Efficiency
Debtors
The three main debtor ratios are;
Debtor Turnover which measures whether the amount of resources tied up in debtors isreasonable and whether the company has been efficient in converting debtors into cash.
SalesDebtors
Average Collection Period which measures how long it takes to collect amounts fromdebtors, the formula is;
Average collection period in days = DebtorsSales x 365
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The actual collection period can be compared with the stated credit terms of thecompany. If it is longer than those terms, then this indicates some inefficiency in theprocedures for collecting debts.
1) Bad debt which measures the proportion of bad debts to sales;
Bad DebtsSales
This ratio indicates the efficiency of the credit control procedures of the company. Itslevel will depend on the type of business. Mail order companies have to accept a fairlyhigh level of bad debts, while retailing organisations should maintain very low levels or,If they do not allow credit accounts, none at all. The actual ratio is compared with thetarget or norm to decide whether or not it is acceptable.
Creditors
The measurement of the creditor turnover period shows the average time taken to payfor goods and services purchased by the company.
Creditor turnover period in days = CreditorsPurchases x 365
In general the longer the credit period achieved the better, because delays in paymentmean that the operations of the company are being financed `interest free` bysuppliers` funds. But there will be a point beyond which delays in payment will damagerelationships with suppliers, which, if they are operating in a sellers` market, may harmthe company. If too long a period is taken to pay creditors, the credit rating of thecompany may suffer, thereby making it more difficult to obtain suppliers in the future.
Inventory
A considerable amount of a company’s capital may be tied up in the financing of rawmaterials, work-in-progress and finished goods. It is important to ensure that the level ofstocks is kept as low as possible, consistent with the need to fulfil customers` orders intime.
The two stock turnover ratios are;
1) Stock turnover rate
Cost of SalesStock
2) Stock turnover period
SalesCost of Sales x 365
The higher the stock turnover rate or the lower the stock turnover period the better,although the ratios will vary between companies. For example, the stock turnover rate ina retailing company must be higher than the rate in a manufacturing concern.
The level of inventory in a company may be assessed by the use of the `inventory ratio`,which measures how much has been tied up in inventory.
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InventoryCurrent Assets
Productivity
Productivity ratios measure how efficiently the company is using its people powerresources.
1) Profits per employee
Trading ProfitNumber of employees
2) Sales per employee
SalesNumber of employees
3) Output per employee
Units produced or processedNumber of employees
4) Added value per employee
Added value (sales revenue minus cost of salesNumber of employees
Use of Ratios
Ratios by themselves mean nothing. They `must` always be compared with;
A norm or a target Previous ratios in order to assess trends The ratios achieved in other comparable companies (inter-company comparisons)
Benefits
The analysis of management ratios clarifies trends and weaknesses in performance as aguide to action as long as proper comparisons are made and the reasons for adversetrends or deviations from the norm are investigated thoroughly.
Experienced and skilled-trained people will be of a huge benefit to any company.
So, how can you balance the operational side of your business with the seeminglycomplex financial side?
Well, purchase a copy of the inter-active CD/Software that shows and explains `EffectiveFinancial Management`…. it shows you specifically developed effective information forbusiness Owners/Directors/Managers like yourself to explain the meaning behind thecritical financial concepts – and how you can understand them better. The CD/Softwarewill explain, simply, how to understand the figures that are critical in running a successfulbusiness – and how you can use them effectively to make better decisions about yourbusiness.
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This very popular CD/Software will show you how to;
Understand the key financial business performance indicators.
Plan your cash flow to eliminate surprises.
Plus… Analyse your cost drivers to see if costs can be reduced or eliminated.
Review your products and customers for their overall contribution to profitability.And finally, how to…
Assess the return on investment in your business, to see if you are enjoying a fairreward for your efforts.
We can guarantee that this CD/Software will be enormously valuable to you. It will,without question, help you identify the hidden potential within your business and toprovide you with the focus to exploit that potential.
To take advantage of this superb opportunity could not be simpler. Visit the websitewww.cavendish-mr.org.uk which contains full details on the CD/Software, and thepowerful testimonials page tells you what others say about the rewards of using thisinformation. The title is `Interpreting Accounts for the Non-Financial Manager`.
Colin Thompson, a former successful Managing Director of Transactional/PrintManufacturing Plants, Print Management/Workflow Solutions companies, Group Chairmanof the Academy for Chief Executives and a Non-Executive Director, helping companiesraise their `bottom-line` and increase their `cash flow`. Also, an author of over 400articles, several books, research reports and business models on CD-ROM’s/ Software.
Success is a journey, not a destination Our goal is simple…to help you reach yours.
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Cost Recovery and Improved Productivity
Key issues that affect productivity and cost recovery
Absence of flexibility Restrictive practices Inappropriate shift patterns Premises too small Inadequate estimating and costing system Inappropriate or old equipment Inadequate sales and marketing Management require training Managers/supervisors attitude to change Inadequate levels of supervision Poaching of newly qualified trainees/skilled and experienced by other companies Famine of skilled employees Poor employee communications
Solutions
Cost Reduction
Remove or reduce non-essential costs – consider contracting out these services. Buying function – economies of scale – look at teaming up with other local businesses Buy raw materials ‘just in time’ – reduce amount of raw material stock held on site to
a minimum. Consider and review other stock control measures
Reduce lost production time
Analyse down-time and the causes Look at ways of reducing make-ready times Review when breaks are taken and the impact on production Remove or reduce wash-up times Monitor and report actual against estimated lost time Start-up/make-ready to be completed on the next shift Improve production communication and control to minimise lost time Plan maintenance as far as possible to reduce machine down-time Printers to take responsibility for passing their own work Examples from Pressroom Performance Targets
Flexibility between roles
Departmental manning to give flexible crewing according to production requirements Flexibility between all pre-press and press room operations and between where
required on a temporary basis e.g. skilled workers to undertake unskilled work whennecessary.
Press room and print finishing operatives to be interchangeable subject to training Effective team working between machine operators and assistants
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Continuous running and manning levels
Reduce shift overlap times Review timings of breaks Consider continuous shift changeovers and continuous running through breaks Remove the use of assistants to give a more flexible crew Have 1 minder operating 2 single colour machines Operate a 6 unit with 2 minders and 1 assistant (look closely at requirement) Re latter two points see Schedule 1 - Pressroom Performance Target
Working hours
Analyse and review customers’ requirements Consider introducing shift work e.g. 7 day 24-hour cover; 4 day shifts; 3-x12 hour
shifts; night shift; double-day or treble shift. Consider annualised hours, flexible finishing times and breaks and staggered start
and finish times. Consider terminating shifts where not justified by customer demand
Annualised hours
How this approach works – it establishes contractual working hours as a total for theyear and distributes the employee’s working time in accordance with the company’soperating needs, whilst also attempting to take into account the wishes of theemployee concerned.
The basic principle is that there are only two kinds of ‘time’; working time and non-working time (or leisure time). Annual holidays, bank holidays and weekends are allincluded in the latter.
Value of this approach = Flexibility - it increases productivity or efficiency toaccommodate the work in the reduced time available.
Cyclical or seasonal demand – operating hours can be adjusted to coincide with thepeaks and troughs of the cycle.
Benefits of annualised hours:- reduces individual working time without loss of output- expands operating hours- cuts overtime- balances output and demand- increases flexibility- controls labour costs- generates change and an environment accepting of change- benefits the workforce and the organisation
Possible issues with annual hours include: communicating the concept and itsbenefits, workforce resistance, the need to consult and agree upon any change inhours as a fundamental change to an employees, terms and conditions, and apossible increase in the numbers employed.
Issues that need careful consideration:- communication of basic principles- consultation (and possibly agreement) with the workforce- modification of terms and conditions to fit annual hours- cost/benefit analysis- advance planning of recruitment, training or retraining- senior management commitment to the concept
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Seasonal Hours
Consider whether this method of adapting contractual working hours for specific highor low seasons or periods would assist with productivity and the reduction of costs.
Overtime
Shift working to replace ‘institutionalised’ overtime working Monitoring, control and proper authorisation of overtime to ensure that costs are
controlled. Reduce overtime where possible (e.g. improved production planning, training to
improve flexibility of employees).
Equipment/Systems
Carry out a review of current equipment and systems Are new estimating and costing systems required? Is new equipment required? Introduce/update management information systems
PR/Marketing
Maximise use of websites, National Exhibitions, Specialised Magazines etc Attend/have a presence at tradeshows Free PR opportunities e.g. local/national press
Personnel/HR Issues
Incentives to consider:
Profit related pay Performance related pay Bonus scheme Profit sharing scheme
Training and development:
Effective induction training programme Appraisal system Planned approach to training – carry out a training needs analysis In-house training & promotion Multi-skilling – training to reduce demarcation between roles Review recruitment practices – are there other sources of skilled workers?
Contracts of employment:
Ensure contracts of employment accurately reflect any requirement for flexibility Re; sales/marketing employees - ensure the contracts of employment detail the
position regarding all payments (e.g. commission) and the position on termination ofemployment e.g. restrictive covenants.
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Culture:
Review and assess company culture e.g. management style and tradeunion/employee relations.
Does it affect employee’s performance? Does it empower employees/develop a sense of personal responsibility? Does it encourage equal opportunities for all? Does it encourage or resist necessary change? Do your managers ‘self-censor’ useful initiatives?
Fringe benefits/Flexible benefit package:
Needs to be competitive Review reasons why employees leave Consider introduction or expansion of affordable benefits
Communication:
Different methods can include: management and employee briefings, works council orother employee representative body, company handbook, newsletter, bulletins,notices, email and intranet.
Ensure a wide range of information is available to all employees e.g. regarding jobroles, conditions of employment, organisational issues and customer information.
Ensure consistency across all sites/companies where relevant Employee suggestion box – encourage employees to contribute to ideas for
improvements.
Team work:
Establish regular meetings Ensure effective and regular briefings take place Look at methods of team building e.g. projects, social events
Staff retention:
Review the levels of staff retention Low staff retention can be very costly in terms of recruitment and training What can be done – many of the above initiatives will reduce staff turnover
Absence reduction:
Establish a clear absence reporting procedure Introduce return to work interviews Where monotonous work is an issue – consider rotation of roles where possible Ensure absence levels are recorded and monitored Are absence levels too high? If so seek advice and take action.
Summary
Communication - Communication - Communication on all issues that effective thebusiness.
People = Performance = Productivity = Profit
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Strategic Information Management
This Business Model clearly recognises the importance of `Strategic InformationManagement`. The Business model is a complete system of a business enterprise andhow you can implement the model into your business for long-term success. ThisBusiness Model has been created specifically for any organisation to be successful byexperienced and skilled top management from industry.
The model, correctly applied will provide the opportunity to increase the `bottom-line`performance on existing levels of sales. It is equally applicable to all sizes of companies(owner managed businesses to large group companies) no matter what location, range ofproducts produced or the process employed. This powerful model will addressinformation collection and analyse over key areas of strategy, production, finance andsales – all based on the principles of `Business Excellence`. Once having gained andanalysed the information the model then provides detailed guidance on how to managethe necessary change management processes to ensure successful implementation.
"Strategic Information Management in 2010 is going to be a terrific tool. People who
know how to use information strategically will be on the fast track of "Strategic
Information Management in the New Reality." Says Colin Thompson
Strategic information management will integrate information management at theexecutive, strategic level of an organisation. It's all about managing informationstrategically for competitive advantage, which requires a new perspective and new skillsfor most records and information management professionals. Experienced and skilledpeople designed this `Enterprise Business Model`, to help implement a full enterprisestructure for growth and success.
How can I manage information Strategically?
To use information `Strategically` we must first understand our business, we must know… the what, why, when, where, how, and who of our business…. in other words we needan integrated picture of our Enterprise. Our view of information should not be limited todata alone. It should incorporate different types of information including Organisation(Groups), Processes (Business Activities), User Needs, Corporate Objectives,Applications, Functional Requirements, etc. These various information types can then berelated to each other to paint a complete picture of our enterprise…
What is a Strategic Information Management Business Model?
A Strategic Information Management Business Model is a planning tool, used byDirectors/Company Owners and Managers, to support both strategic and tactical projectplans. This identifies:
What the business does
Who does it
How it is done
What resources are needed and available
But most importantly: `How these elements relate to each other`.
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A Strategic Information Management Business Model is an interactive 3-D "map" of theorganisation, its processes, and resources.
A MAP is a document that provides context to information; it positions objects relative toother objects. Consider if the military sent troops into battle without carefulreconnaissance and maps, or a master plan that details who does what, where, andwhen. It seems sensible then that before we embark on major corporate change weshould arm ourselves with a clear set of maps to guide our efforts. A StrategicInformation Management Business Model is a non-invasive and participatory tool toincrease stakeholder understanding, improved communication, and provide strategicinsight to the possibilities within the enterprise. It acts as an aide memoir to ensure thata vital step is not missed in the change process
Using the Strategic Information Management Business Model, management can identifywho does what work, which resources are used by a particular process, which groupsmanage a specific resource and which processes are dependent on this same resource.
A Strategic Information Management Business Model can be navigated to takestakeholders from a big picture view of the enterprise to the detail of their componentrelationships. If we know one of the three entities (group, activity, or resource) we cantriangulate and identify a variety of unknowns. For example: identify all mission criticalprocesses, the groups involved, and resources that support these processes.
Why do I need one?
Simply stated to plan, implement, and respond effectively to the impacts of change.
What are the Benefits of a Strategic Information Management Business Model?
The benefits of are:
1. A better way to gather and organise information. Data is easily verified bystakeholders, it supports collaborative problem solving, therefore trust andconfidence in the model grows.
Through 2010, over 70 percent of businesses will experience at least onemajor organisational change that disrupts more than 50 percent of existingreporting relationships.
Through 2010, enterprises that fail to prepare their workforces for continuingorganisational change will miss business objectives by 30 percent and willexperience turnover rates of at least 20 percent annually for their keyknowledge and leadership workers.
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2. Better understanding and communication of complex business issues. Informationis structured to represent relationships found in the real world. This allows us toidentify inconsistencies and the impact of planned changes to people, processes,and other corporate resources.
3. Corporate Alignment: The ability to link strategic goals and objectives with tacticalplans, projects, and resources required achieving those objectives. Project fundingrequests are more easily understood and…. approved.
4. Improve the quality of business decisions and reduce the risk associated withCorporate Change.
The "RISK" of a decision is defined by a simple formula:
(RISK) = (Probability) X (Consequence).
The use of the methodology increases the VALUE of decisions by identifying both theRISKS and the POTENTIAL OUTCOME of a variety of alternatives. This enhances thequality of the decision making process.
5. Knowledge Management: Capture and Reuse of knowledge to solve similar orindustry specific business problems. E.g. Implementing BS EN ISO 9000:2000 anddownsizing.
6. The Strategic Information Management Business Model is structured around theproven principles of the European Foundation for Quality Management's BusinessExcellence Model - an internationally recognised methodology for measuring thenine key criteria of any organisation:
Leadership People Management Policy and Strategy Resource Management Processes People Satisfaction Customer Satisfaction Impact on Society
Business Results
This helps your business to identify its current position and determine futuredirection and priorities. It allows comparisons with the achievements of otherorganisations and provides for regular monitoring of progress.
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What are some applications for a Strategic Information Management BusinessModel?
Corporate Teaming: a planning and communication tool for defining the roles,responsibilities, and information sharing requirements on projects.
Human Resources Management: a knowledge management tool for job design, jobanalysis and human resources planning.
System Integration: Analyse user needs, define functional requirements, create systemspecifications and optimise information systems.
Organisational Restructuring: Assess the impact of corporate downsizing,outsourcing, mergers, and acquisitions to the business model. Reduce risks; plantransitions, service level agreements, etc.
WEB Site Planning: Support your Strategic Planning activities by "Mapping" WEBcomponents to the business model. Use the model to define the business model, identifyactivities to be enabled, optimise business processes, establish content stewardship,gather content, and map all this information into a single model. The business modelprovides a roadmap and continuity between the business model and the WEB enableddelivery system.
Different types of Business Models
Business Modeling is distinctly different from the financial modeling, which uses thespreadsheet as its core tool. To understand business modeling we must first understandthe meaning of a business “enterprise”.
A Business Model is a complex system of people, process, and technology componentengineered to accomplish organisational goals.
There are many different types of business models, each type serves a specific purposeand is focused to the needs of a specific user. I will highlight only three in this article:
Enterprise Business Modelling (EBM): The newest type of modelling methodologies,it is a planning tool that captures different types of business information (i.e. businessobjectives, user needs, organisation structure, business activities, data resources, etc.)and relates these to each other in a meaningful way. It is used to gather and organiseinformation to bring clarity and a common understanding of how the business interactswith stakeholders. It supports a variety of analysis capabilities such as change impactanalysis to support organisational change such as mergers & acquisitions,upsizing/downsizing, and outsourcing activities. Other uses include the StrategicManagement of organisation software portfolio and information assets. EnterpriseBusiness Modelling is frequently confused with Business Process Modelling. The two arefrequently used in conjunction with each other but they are not the same.
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Business Process Modelling: A common modelling methodology that visually depictsthe flow of work through an organisation in a process. It focuses on the relationshipbetween the individual components of a specific business process and their enablers. It issometimes referred to as business modelling, hence the frequent confusion with EBM,and is often called `Workflow Modelling`. Whereas workflow modelling is used to analyseand optimise a business process, Enterprise Business Modelling is a framework that cancontain all the components of a workflow model; it can reference specific workflowmodels and can be used to determine the enterprise impact of any planned change madeto these components.
Data Modelling: The first and oldest of the modelling methodologies, it lets users trackwhere data resides in a database or related applications. A data model is a conceptualrepresentation of the data structures that are required by a database. The datastructures include the data objects, the associations between data objects, and the rules,which govern operations on the objects. As the name implies, the data model focuses onwhat data is required, and how it should be organised rather than what operations will beperformed on the data.
A data model is independentof hardware or softwareconstraints. Rather than tryto represent the data, as adatabase would see it, thedata model focuses onrepresenting the data as theuser sees it in the "realworld". It serves as a bridgebetween the concepts thatmake up real-world eventsand processes and thephysical representation ofthose concepts in a database.
The Enterprise Business Model can be used to capture the data model but is generally notused to analyse and optimise the data model (specific data modelling tools are used forthis purpose). Information in the EBM may be exported to the specific data-modellingtool used by a data base designer.
In summary each type of model has a purpose and a place in `Business Process
Improvement`. Although a traditional toolkit supports workflow and data models to
analyse your business needs the `new` Enterprise Business Modeling approach will
expand the value proposition to help you manage your information strategically.
To learn more about Business Modelling I have explained below in more detail.
Why use a model?
An enterprise embodies many functions and leading an enterprise requires us to leadthem all. To succeed in one function may be a science, but to succeed in enterprise is anart. A good model can inspire the promising artists to great achievement.
Reality
BusinessPlanning
ApplicationDevelopment
ProcessReengineering
Use Cases
Class Model
Collaboration
Enterprise Model
Financial Model
Enterprise Model
Workflow Model
Data Model
Reality
BusinessPlanning
ApplicationDevelopment
ProcessReengineering
Use Cases
Class Model
Collaboration
Enterprise Model
Financial Model
Enterprise Model
Workflow Model
Data Model
Reality
BusinessPlanning
ApplicationDevelopment
ProcessReengineering
Use Cases
Class Model
Collaboration
Enterprise Model
Financial Model
Enterprise Model
Workflow Model
Data Model
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A business model provides us with a basis for understanding and a set of stimuli. At themacro-level, a model will prompt us to make decisions and take actions; at the micro-level, a model might specify actions to be taken.
All entrepreneurs hold a 'mind's eye' picture of their `enterprise`. It reflects what theyperceive to be the enterprise's key elements and how these key elements relate toneeds. Naturally, how clear and coherent that picture is; how up to date, how detailed,and how accurate, will vary widely from entrepreneur to entrepreneur.
The risks and limitations of running a business on the basis of that informal, personal,internalised model alone are largely dimensioned by the scope and complexity of theenterprise, and by the extent to which the leader legitimately exercises personaldiscretion and control over everything that's done.
For example, there are few risks in this approach for a 'one-man-business' PrintingService. Here, the entrepreneur is, at one and the same time, the sole employeestakeholder the major supplier stakeholder (labour being the key material), and probablythe sole investor stakeholder. The need to communicate process knowledge and contextexternally is effectively eliminated. The internalised, informal model may well beadequate - though even here, it will be worthwhile to externalise sufficient of a simple,consistent 'process model' to enable customers to make and maintain contact.
For Example, if we move from Printing Service to Printing Group the picture changessubtly. Supplier stakeholders grow more key. The operation, too, will grow morecomplex. Whilst the entrepreneur will grow confident in a core portfolio of familiar,common work, there will be other tasks beyond his competence to remember. For thesehe will need to refer to business manuals. In effect, the risk of relying on a whollyinternal, informal model will have increased significantly and a more formal, externalisedmicro-model will have become appropriate.
If, later, our entrepreneur opens a subsidiary employing another 10 printers we can seethat he needs to externalise more not only for his own protection, but also to sharecorporate understanding across his organisation.
Where numbers of people become increasingly involved, we need to understand andshare not just the functional elements of our business, but also how those functions, andthe stakeholders involved with them, inter-relate. For success, we need to work 'on' ourbusiness rather than 'in' our business. To do that we need a simple but comprehensiveappreciation of our enterprise on which to build for the future. In these circumstances,whilst many enterprises may survive and a few may even prosper, none is likely torealise its full potential without some use of a Strategic Information ManagementBusiness Model. It offers a simple way to consider our organisation's dynamics andopportunities. It provides a basis for shared and consistent understanding; it can free uptime and energy to deal with specific pressures. And it catalyses a way of thinking thatpromotes learning and, through learning, improves our chances of success. At the veryleast, a Strategic Information Management Business Model can reduce wasted effort onunproductive approaches: at best it can stimulate us to create new, world-beating,solutions.
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SUGGESTIONS FOR A VARIETY OF USES OF
` Strategic Information Management` - Business Model
Every company should have comprehensive links between its strategy, businessprocesses and operations. But the reality is that `only the rarest of companies actuallyreflects its business strategy in the business processes`. Making this connection is thedecisive link between a company’s strategic direction and the solutions it implements.Comprehensive process management is the actual source of creating value in a company.
The Strategic Information Management Business Model helps to build bridges to achievethis goal. It uses the balanced scorecard approach of the EFQM Business ExcellenceModel and links this with ISO 9000 Quality Management procedures - to visually show anintegrated and tangible process model that maps the processes at all levels to connectbusiness strategy with operations.
ENTERPRISE MANAGEMENT
FINANCEREVIEW
PERFORMANCEOF NET PROFIT
REVIEW FIXEDAND VARIABLE
COSTS
PRODUCTION
SALES
PROCESSESAND INTER -
RELATIONSHIPS
REVIEWHOURLY COST
RATES
?????????
COMPANY
PERFORMANCE
MEETING THE
NEEDS OF THESTAKEHOLDER
S
?????????
?????????
NEED TO
DO BETTER
?????????
EVERYTHING IS
ENTIRELY
SATISFACTORY
REVIEW DIRECTAND INDIRECT
COSTS
ANALYSEPRODUCTIONEFFICIENCY
ANALYSEQUALITY COSTS
MANAGING THE CHANGE
METHODOLOGY FOR IMPROVING FINANCIAL AND PRODUCTION RETURNS ON EXISTING LEVELS OF SALES
REVIEWSTRATEGY
ANDPERFORMANCE
WHYAND HOW
PEOPLE BUY
REVIEWMARKETING
STRATEGY ANDOPPORTUNITIES
YES
COMPANY
POLICY
AND
STRATEGY
NO
MONITORFINANCIALFORECAST
YES
MANAGEMENT OF INFORMATION
Business Excellence - Key performance results
REQUIREREFERENCE
TOSYMPTOMSORTER ?
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The business model uses flow diagrams to provide executive staff with a readyreference source of business and management-proven best practice. The businessmodel helps to give a ‘helicopter view’ of the business, linking strategy withproduction, sales, finance and management information;
The business model is a desktop pocket consultant - it assists delivery of thebusiness strategy, by setting the direction and objectives based upon customer’sneeds and the resources needed to accomplish them;
It is an aid for reviewing company performance in production, sales and finance -with a focus on what can be improved and how it can be done. It shows how andwhere to collect production and job-tracking information and provide the reportsfor management - essential for lean manufacturing control;
Its graphical approach provides an operational model for achieving consensus inthe management team, to successfully deliver the strategy and set the principlesfor improving performance;
The business model is a guide to successful management of change within yourown organisation and as a vehicle for gaining commitment of the workforce. Itsets the basis for continuous performance improvement and cost reduction, bymaking a series of a minimum 1% efficiency and financial gains throughout thebusiness; It also shows how to manage change in the business by dealing withproject, risk and benefits management;
It identifies and illustrates how to make utilisation and efficiency improvements inproduction processes – and thereby deliver an increased net profit on existinglevels of turnover. This provides a methodology for reversal of margin erosion;
The business model is an invaluable training aid for customer-facing sales staffand middle management to deliver industry best value and best practice – whileproviding immediate reference to the EFQM Business Excellence model, ISO 9000and ISO 14001 workflows and benchmarking.
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RECOMMENDED REPORTS AND KPI`s
Sales & Production KPI`s
These are the recommended reports that should be tracked monthly and compared withprevious and average month/year performances. Most MIS models produce these reportsas a matter of course.
Purchase orders placed thisweek/month
Actual vs Estimated time bydepartment/cost centre
Spoilage as % of net production
Delivery to stock performance/non-available products
Advance orders
Added value by process
Added value as % of netproduction
Estimates produced/week/month
Estimate conversion rate as %Client Service spoilage as % of
net production
Material wasteAdded value as % of estimated
added valueActual versus estimated time by
department
OvertimeUtilisation of equipment %Actual number of customer
complaints
Non-chargeablehours/week/month Machinery downtime
Orders received/processed thisweek/month
Weekly Representative reports
MANAGEMENT INFORMATION SYSTEMS SALES AND PRODUCTION REPORTS
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Recommended Monthly Checks or KPI`s
These are the recommended reports that should be tracked monthly and compared withprevious and average months/years performances.
MIS MONTHLY MANAGEMENT REPORTS - the recommended essential statistics
Report subject Analysis by Report subject Analysis of
1. Estimates
2. Order intake
3. Estimateconversion rate
4. Productionperformance measures
5. Sales invoices
6. Sales invoiceperformance
sales representativeproduct group codes
customer / trade sector
sales representativeproduct group
customer / trade sectoraverage order value
(plus trends in all of the above)
sales representative performanceexpressed
as a percentage of section 2plus value
utilisation by departmental cost centreutilisation by department
above as a comparison 13 week running total
downtime codesdowntime by cost centredowntime by department
Full range of marketing reports by
sales representativecustomer
sector sales
1. Single line analysis of total equalling totalreported in monthly reports, section 5
Expanding cost of sales formaterials, outwork, delivery
2. Variance analysis between estimate andactual performance, allowing for a
highlight report to call up individual jobcost history for detailed analysis
Without measurement everyone is right, words are cheap and the focus is inwards
With measurement, everyone focuses on the outcomes, everyone focuses on thecustomer, and more importantly the company's own accounts and their development
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Some key Financial KPI`s to track
These are the recommended reports that should be tracked monthly and compared withprevious and average month/year performances. Imprint systems already produce thesereports as a matter of course.
Revenue - actual vs target
Profitability - operating margin vstarget
Shareholder value
Return on equity
Shareholders' dividends
Debt/equity ratio (gearing)
Debtor days
Stock as a % of revenue
Sales per employeePurchasing cost as a % of total
spend
Operating costs per employee
Utilisation of space per employee
Return on capital employed
MANAGEMENT INFORMATION SYSTEMS FINANCIAL REPORTS
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Financial KPI`s
Definition of Added Value / Value Added
Selling price less materials and outwork equals value added (what you keep)
Value added less direct wages (what you pay) gives contribution (to overheads andprofit)
Performance ratios
Added value / sales (Proportion of sales you keep)
Added value / wages (A ratio of financial productivity)
Contribution / sales (What is left of sales going to overheads and profit)
FINANCIAL DEFINITIONS (for Financial KPI`s)
Sales per head are calculated from the gross value of sales (excluding VAT and the saleof fixed assets).
Value added per head is the value you add to the purchased raw materials and outsideservices through your manufacturing output. It is calculated from sales less the cost ofdirect materials and outwork.
This is a useful measure in that it removes any anomaly due to high or low direct chargesfor material and outwork content. This ratio is generally considered a better measure oflabour productivity than sales per head.
Value of output per head is calculated from sales plus closing work in progress, lessopening work in progress. This is a good measure in that it removes any fluctuation insales due to movement of work in progress. It should be noted, however, that this ratiomight not allow for any resulting profit (or loss) on work in progress.
Value added to sales. This is an important ratio because it measures the directmaterials and outwork content of sales in terms of a percentage.
Sales to wages. This is an important ratio because, after direct materials and outworkcosts, wages are the highest individual cost of production. However, extreme care needsto be taken in the interpretation of this ratio as direct materials/outwork costs impact onany ratios that involve sales. This helps you determine the comparative influence ofdirect costs and wages on sales.
Value added to total pay is calculated from sales less the cost of direct materials andoutwork divided by total pay. This ratio indicates whether you have paid more or lesswages for the level of production achieved.
Sales over operating assets give a good indication of how fast capital is being turnedover. Generally the greater use made of capital the better, because it is a gauge of theuse of both fixed and current assets and means that resources are not idle but earning.
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Value added over operating assets is another good indicator of how effectively capitalis being used. It is sometimes argued that it is a better measure than sales overoperating assets because it eliminates direct materials and outwork, and therebydiscloses capital usage relative to the wealth created by the business.
Capital employed per head is an indication of the amount of capital investmentrelating to total employees. The higher the ratio, the greater the amount of capitalemployed and the need for a good use of capital. Capital employed is shareholders fundsplus long term loans plus other long-term liabilities the profit ratios are a measure of acompany’s overall profit performance rather than labour productivity. They provide fourdifferent ways of measuring the same profit figure, and thereby give a wider perspectiveon a company’s overall performance.
Two measures of profit are made. The first ‘net profit before financing charges aremade’, is very specific – ‘net profit before tax and before taking account of depreciation,leasing charges, interest charges, profit or loss on sale of fixed assets or miscellaneousincome or expenditure not arising from trading activities’. This definition removes thevariation that can occur in depreciation and other policies concerning financial charges,thereby creating a more standardised measure.
The second, ‘net profit after financing charges are made’, is the final net profitbefore taxation figure, usually to be found in company accounts. It takes into accountdepreciation, leasing charges, interest charges, profit or loss on sale of fixed assets ormiscellaneous income or expenditure not arising from trading activities.
Net profit (before financing charges) to operating assets is generally regarded asthe most important of all profitability ratios, as it encompasses all other ratios. The ratioillustrates not only how much profit has been made, but also how well the capital hasbeen employed.
Net profit (before financing charges) to sales is one of the most widely used ratios,primarily because of its simplicity, and also because sales are seen as the key toprofitability. This ratio is used as a test of the profitability of sales and represents theamount of profit on every £100 of sales.
Net profit (before financing charges) to value added removes both the material andoutwork content from sales and because of this, the formula provides a morestandardised approach to performance measurement than the ratio profit to sales. It canassist in the interpretation of profit trends.
Net profit (before financing charges) to capital employed shows the return earnedon the capital invested in the business, before taking account of depreciation, leasingcharges, interest charges, profit or loss on the sale of fixed assets. This result can thenbe compared with what could have been derived from an alternative form of investment.
Net profit (after financing charges) to operating assets provides a comparisonbetween the return on money invested in the business, and what might have beenobtained from outside investments.
Net profit (after financing charges) to sales is a demonstration of the average profitmargin obtained on sales.
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Net profit (after financing charges) to value added indicates the average profitmargin derived on value added.
Net profit (after financing charges) to capital employed provides a comparisonwith the return that could be earned outside the organisation after accounting fordepreciation, leasing charges, interest charges, profit or loss on the sale of fixed assets.
FINANCIAL FORMULAE (for Financial KPI`s)
Formulae
1) Sales per head = Sales/Number of employees
2) Value added per head = Sales - (Direct materials + Outwork)/Number ofemployees
3) Value of output per head = (Closing work + Sales) - Opening work/Number ofemployees
4) Value added as a % of sales = Sales - (Direct materials + Outwork) x 100 /Sales
5) Sales per £ of wages = Sales/Wages
6) Value added per £ of wages = Sales - (Direct materials + Outwork) / Wages
7) Sales over operating assets = Sales / Fixed Assets + Current Assets
7) Value added over Sales - (Direct material + Outwork) /operating assets =Fixed Assets + Current Assets
9) Capital employed per head = Capital employed / Number of employees
10) Net profit before financing charges =Net Profit before charges x 100 as a % of operating assets / fixed assets + Currentassets
11) Net profit before financing = charges + Net Profit before charges x 100 as a % ofsales
12) Net profit before financing charges =Net Profit before charges x 100 as a % of value added = Sales - (Direct material +Outwork)
13) Net profit before financing charges =Net profit before charges x 100 as a % of capital employed / Capital employed
14) Net profit after financing charges =Final net profit x 100 as a % of operating assets /fixed assets + Current assets
15) Net profit after financing charges = Final net profit x 100 as a % of sales / Sales
16) Net profit after financing charges =Final net profit x 100 as a % of value added Sales - (Direct material + Outwork)
17) Net profit after financing charges =Final net profit x 100 as a % of capital employed / Capital employed
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Model What?
So what `Business Model` should we use? Our `Enterprise Business Model`. Most usefulto the entrepreneur and any size business would be one that is holistic; cross-functional;recognises the pivotal nature of stakeholder relationships; and addresses key input andoutput issues. Ideally, also recognises the intangible 'flux' that flows through anenterprise, fuelling and pulling together its otherwise disparate functional andbehavioural elements. Our `Enterprise Business Model` fulfils these needs.
Introducing the Enterprise Business Model
The Enterprise Business Model was designed and created to facilitate discussion andaction between Executive Management and interested parties which would enablepositive, structured meaningful discussion to take place. The outcome of such discussionsbeing to highlight opportunities in the highly competitive market environment in whichthe organisation operates to improve bottom line performance on existing levels of sales.
The EBM team set out to design and create an easily understood innovative businessmanagement tool, taking the printing industry as a case study, to assist companymanagement by taking a very complex subject and treating it in a way that is easilyunderstood. The principle is simple in that by making a significant on-going series ofsmall efficiency and financial changes it is possible to illustrate how a printing businessmay achieve greater financial success and significantly reduce margin erosion. Theobjective of the software is to achieve a series of on-going one percent efficiency gains ineach area of business activities.
The EBM is applicable to all sizes of company, from the small owner managed businessesto large group companies no matter what location, range of printed products produced orthe printing processes employed.
The Enterprise Business Model (EBM), in compact disk format is an exciting and groundbreaking product that has been developed by a team of business consultants with over100 years of combined experience in the printing industry/allied trades and otherindustries. The EBM gives a comprehensive and detailed insight into the positivedevelopment of any business – showing how a variety of efficiency and financialimprovements can be made, with step-by-step instructions, resulting in dramaticimprovements on a daily basis in 'bottom line' terms. This is achieved by assistingdiffering levels of management throughout the organisational structure to recognise andachieve incremental improvements across the multiple activities of the business. By usingthis analytical tool, an in site into industry best practice is presented in a readilyaccessible, easy to use format. The EBM contains licensed material from the BritishStandards Institution in the form of BS EN ISO 9000 and BS EN ISO14001 together withthe Business Excellence Model (EFQM) licensed by the European Foundation of QualityManagement
Having run successful businesses over many years, the authors are aware of how lonelyand sometimes difficult it can be as part of the senior management team whencompeting against continuing rising costs and daily business pressures in an everchanging and demanding market place. Experience has shown that because of the never-ending daily ‘fire-fighting’ exercises forced on many executives, there is little opportunityto quietly and effectively plan and implement efficiency and cost saving strategies - letalone to control the processes involved and to monitor the results for continuousimprovement.
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Often comments have been heard such as ‘it has always been done that way’, ‘well that’sthe way it is done here’, ‘management do not seem to understand’, and ‘we cannotchange anything’. Well, we have welcome news for people operating under suchcircumstances - there is positive help at hand and all that is needed is the courage tograsp the nettle and face up to some possibly daunting challenges. By accessing andimplementing the industry best practice and principles contained within the EBM, theproven process of successful continuous improvement is not only possible but mostdefinitely achievable - the rate of progress and degree of success is very muchdetermined by the actions of the management team.
The principle of how the EBM is constructed
The principles of ‘hierarchical breakdown’ on which the structure of the EnterpriseBusiness Model (EBM) is based were formalised by the American Air Force to takecomplex systems and/or activities and break them down into a hierarchy of ‘bite sized’pieces, which could be easily managed and understood.
The principles of hierarchical mapping can be applied to any business process, orbusiness issue that is complex and needs to be easily understood, analysed andcommunicated. Prior to this, the results of any such process breakdown and analysiswere documented in text on reams of paper, diagrams, and a number of inter-relatedcomplex flowcharts or a combination of such methods.
Using the developed principles of hierarchical structures, an Enterprise Business Modelmodule is a series of process maps, illustrated as a series of ‘mother and child’ diagrams.The activity shapes, text and images on the diagrams can quickly be linked to childdiagrams by creating a drill down until the subject of the module is fully explained andsupported by explanatory documented information as appropriate.
A business process, no matter how complex, may be understood if it is broken downhierarchically into increasingly greater levels of detail, which when viewed togetherdescribe the whole picture.
Illustration of the principle of mother and child diagrams
CHILD
CHILD
Electronic
Explanatory
Document
MOTHER
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Unlock your Company's potential by introducing `The Enterprise BusinessModel`
The Enterprise Business Model is business performance improvement software; there isno other business model available to compare with the power and detail of the EBM.
The EBM is about your business - to help you effectively compete more successfully intoday's difficult market conditions. It enables the empowerment of management teamsto structure and control the business to make more out of the sales you already achieve.Only your own determination and passion will limit the improvement to the overallperformance of the business.
The EBM and ‘Strategic Information Management’
The EBM clearly recognises the importance of Strategic Information Management.
It shows how you can implement the model into your business for long-term success andprofit. The `Enterprise Business Model` has been created specifically for the printing andcommunications industry by experienced, skilled and successful top management whovery clearly understand what you are up against. If only this product had been availablewhen we were in your position, how helpful that would have been – to a print executivein need, the EBM is a friend indeed . . . ! Also, the EBM can be used in any organisationin our sector.
The application of the principles and strategies contained within the EBM providesbenefits including:
The availability of an immediate and continuous reference source to help youfocus in your decision making processes
The use of a business tool which identifies cost saving ideas and industry bestpractice in all areas of your business (management information, manipulation andprocessing of data, production, sales, finance and the management of change)
Identifying areas of your business to target to improve your business performance
Illustrating in detail how to grow financial returns on a daily basis
Assisting you to explore areas of your business to better understand how you canintroduce business efficiency and control practices. Once decisions are made theEBM will illustrate the how, the why, and the way forward. This includes how totackle the vital structured change management required for you to make thechanges happen successfully to achieve the envisaged benefits on time and at thecorrect cost.
The Enterprise Business Model is about
Your Business - To help you effectively compete more successfully in today's difficultmarket conditions.
A powerful, easy - to - use management tool packed with cost savings ideas andindustry best practice.
Showing how to systematically improve your overall business performance.
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Demonstrating how to achieve a greater financial return on existing levels of sales.
Enabling management to structure and control the business to make more out ofwhat already exists.
By using the `Enterprise Business Model` the results you achieve will only be limitedby your own determination and passion to improve the financial performance of yourbusiness. The EBM shows you the way, the how and the way forward for success.
The EBM is a `complete` view of a printing business enterprise and shows how it ispossible to implement the model into the business for long-term success and profit.
The benefits of the EBM as experienced by a printing company include
Operating a business tool which identifies cost saving ideas and industry bestpractice, based on the principles of the EFQM – European Foundation Model forBusiness Excellence.
Helping the company compete more successfully in today's challenging marketconditions.
Identifying areas of the business to target to improve business performance.
Illustrating how to grow financial returns on current sales.
Exploring a variety of business areas to better understand how improved businesscontrol practices may be introduced.
and in addition . . . .
Executive staff has a readily available reference source of business andmanagement-proven best practice. The EBM helps to give a ‘helicopter view’ ofthe business.
A desktop pocket consultant - to assist delivery of the business strategy, bysetting the direction and objectives based upon customer’s needs and theresources needed to accomplish them.
Aid for reviewing company performance in production, sales and finance - with afocus on what can be improved and how it can be done. It shows how and whereto collect production and job-tracking information and provide the reports formanagement - essential for lean manufacturing control.
Provides an operational model for achieving consensus in the management teamto successfully deliver the strategy and set the principles for improvingperformance.
Guide to successful management of change within the company and as a vehiclefor gaining commitment of the workforce.
Setting the basis for continuous performance improvement and cost reduction, bymaking a series of a minimum 1% efficiency and financial gains throughout thebusiness.
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Identifies and illustrates how to make utilisation and efficiency improvements inproduction processes.
Training aid for all staff to be customer facing and to deliver industry best valueand best practice – while providing immediate reference to the EFQM BusinessExcellence model, ISO 9000 and ISO 14001 workflows and benchmarking.
Provides a methodology for reversal of margin erosion.
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Visit our knowledge pool at: www.cavendish-mr.org.uk for over 95 powerful publications,business models and services that will help you to be successful.
Also, read our testimonials page to see what others believe.
Fresh thinking requires a vision to see beyond the conventional. When youcombine excellent quality with outstanding value for money you will begin torealise the full potential of creative and well presented business solutions.Together, the sky's the limit. Have passion to learn and let the knowledge helpyou to be successful in life.
"By concentrating on making your softer skills more impressive, you are more likely todistinguish yourself from your peers"
Colin Thompson
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Vision and Mission of Colin Thompson:
Vision
Changing Limited People into Limitless People and Turning Limited Companies into Limitless Companies.
Mission
Success is a journey, not a destination… Our mission is to make you successful in life.
email:[email protected]
www.cavendish-mr.org.uk
“The biggest discovery of every generation is that humans can change their life
by changing their mental attitude!”
Albert Schweitzer
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USEFUL INFORMATION
Publications to help you become more successful:
Business models on CD/Software/PDF
The Enterprise Business Model Margin Hunter Interpreting Accounts for the Non-Financial Manager The Valuer - Business Valuation Software Managing For Customer Care Be paid on time System It’s a Digital Future A Flow Chart of the Partnership Process How to Become a Successful Franchisee
Plus many more publications, research reports, guides and business andeducational CD`s.
All the above business tools are available by visiting the website:www.cavendish-mr.org.uk
"Let us not be content to wait and see what will happen, but give us the determination tomake the right things happen."
Peter Marshall
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CAVENDISH