All posts by : bhadev

When it comes to digital transformation, promoting digital maturity is undeniably essential. With this in mind, we have set out today to help you understand more about what digital maturity is, why it’s beneficial, and why it’s so crucial for your firm’s digital transformation overall.

What is Digital Maturity?

Before we can look at why digital maturity is so essential for digital transformation, it’s important to consider what it actually is. Indeed, digital maturity is something that many firms are aware of but which they may not necessarily understand; with this in mind, it’s so critical that you’ve got a clear understanding of the role played by digital maturity overall.

Digital maturity measures the ability held by an organization to generate value through digital means. Digital maturity effectively measures a business’s level of digital technology implementation and the firm’s success utilizing these technologies.

Digital maturity can be measured in many different ways and is usually calculated or summarized based on individual value areas, such as the ability to use digital technologies to personalize marketing efforts. This, in turn, can help your business drive superior customer loyalty and encourage new sales and conversions. Furthermore, you should note that understanding your business’s current level of digital maturity can help you identify areas of growth and opportunity overall.

Why Digital Maturity is Crucial for Digital Transformation

We’ve clarified what digital maturity is, but at this point, we need to address what makes digital maturity so crucial for digital transformation.
 

Is Digital Transformation Important?

There’s no denying that digital transformation is becoming more and more crucial for firms to aspire towards. Indeed, digital transformation can offer many benefits for businesses and their customers alike; these include the following points.

To begin with, it’s worth considering that digital transformation, as an approach, offers many benefits for overall operational efficiency. By integrating the most effective digital solutions and strategies, you will be able to ensure that your business is offering efficient and reliable solutions to its customers while also keeping your costs to a minimum.

In turn, you can choose either to pass these savings along to your customers or could otherwise use the cost savings to boost the profitability of your business’s enterprises. Moreover, this enhances the customer’s perception of your brand, while also ensuring that customers get a simple and seamless experience. In either scenario, this offers notable benefits for your business through enhancing productivity and efficiency as a whole.

In addition to this, following a digital transformation model can foster more effective and efficient decision-making processes for many businesses. In turn, this could give your firm a myriad of highly valuable data into areas whereby it could improve existing systems and solutions.

Digital transformation is important for more than just talent acquisition and costs, too. In fact, it can be a key driver in encouraging customer loyalty. In turn, this can lead to increased sales and revenue for your firm.

As a final point, it may also be worth mentioning that the integration of digital solutions in your business model may also be valuable for attracting new talent to your firm. Many skilled staff members prefer working for firms that are up-to-date with the latest technological solutions; as such, implementing digital transformation systems is so crucial for the overall success of your business in many ways.

Running a successful business is no doubt a challenging endeavor in itself. Simultaneously ensuring a sustainable work environment for everyone – that might prove even more difficult. However, what if you instead consider this as a non-zero-sum game, in which both elements positively affect the other? This might seem like an indisputable statement, but as research shows time and again – this is most certainly easier said than done. A lot of businesses fail in being an attractive workplace, exactly because there is a lack of internal harmony in the company. Thus, truly engaging with the people and culture of your business, might just be what you need to get ahead of your competition.

People and Culture

People and culture are often associated with the work of the Human Resources (HR) department of a business. For a lot of employees it might seem like a rather abstract term; one in which they do not have to engage. Be that as it may, both the people and the culture surrounding the people are a fundamental part of any workplace. At its core, it is the human workforce that drives the business forward and ultimately is responsible for its success or failure. Having a workforce that is dissatisfied and distant, can take its toll on both productivity and innovation. In fact, having a team That is to a great extent is engaged with their work, can spike profitability by as much as 21 %, whereas unengaged workers are believed to cost corporations $550 billion each year, in the US alone (Forbes, 2019). This illustrates well, just how important it is to strive for a thriving work environment. A good work culture should be characterized by elements such as teamwork, encouragement, understanding, empathy and emotional support. This requires everyone to be more aware of the people they are surrounded by, and how to interact with each person. The overall goal of this is to improve the way people perform in their job.

How to Improve People Performance

People performance is a two-fold concept, with both an individual and a collective layer. At the individual stage, the idea is to make sure that every employee reaches their own, personal potential. However, as many businesses to a great extent rely on the work of teams, making sure that people work well together, is also of utmost importance. To quote Henry Ford’s well-known saying; “Coming together is a beginning; keeping together is progress; working together is success”, the goal should be to ensure that each individual is equipped with the necessary tools to perform their jobs well so that the team – your business – can reach its highest level of success. This is where efficient performance oversight comes to play. The objective is to measure performance in accordance with the established goals of the business, to identify good progress, and areas where improvement is necessary. This is a helpful strategy because people tend to work better when they have concrete numbers and measures to work from. It might be beneficial to measure performance in all areas of the business, even areas commonly considered less crucial, so that each employee gets a sense of attachment to the overall goal.

How to Achieve a Good Work Culture

In theory, all this sounds good and well, but it might be more difficult to implement in practice. After all, people are just people, and conflicts will undeniably arise at some point. This is why a sustainable work environment is crucial. These are some of the steps you can take to limit unwanted situations, and ensure that the people and culture continue to be the driving forces of your business:

Harnessing the power of automation can prove crucial in increasing a company’s ability to operate efficiently – both internally and externally. There are several ways to achieve this, but the main component is, perhaps not surprisingly – advanced technology. Whilst implementing such technologies can seem like a daunting task at first, the adjacent advantages will likely outweigh the obstacles, even for small and medium-sized enterprises (SMEs).

Business Process Automation (BPA)

It appears appropriate to initiate this discussion with comprehension for Business Process Automation (BPA). BPA refers to the partial shift towards automation of essential business operations, besides the more conventional data management procedures. This process is heavily dependent on technology to alleviate the burden of certain tasks, which were previously carried out by humans. As such, companies can streamline their business operations to better tackle their demands. This is not to say that humans are removed completely from the process. In fact, following on from the ‘humans-in-the-loop’ concept, humans will still play an integral part in the process, simply with the aid of technological advances. This marked shift towards human-computer interaction (HCI), is the true game-changer of automation. BPA allows core functions of the business to be handled automatically so that human labor can be directed towards more innovation. This process must necessarily start with an understanding of both the needs and goals of the business, to properly assess which tasks are best suited to be operated automatically, and which tasks the human employee is best equipped to handle.

Intelligent Automation

Now that we are familiar with the basic concept of automation, it is time to deep dive into its practicalities. It might be beneficial to start with a comprehension of Intelligent Automation (IA). Whilst there are several layers to automation, IA takes the automation process to the next level by combining the use of both Robotic Process Automation (RPA) and Artificial Intelligence (AI) to ensure accelerated end-to-end automation of a business. As such, even highly demanding tasks such as data manipulation of unstructured data can be automated. Furthermore, with cognitive technologies, businesses can polish existing systems to discover and mitigate faults and leaks within the system itself, thus reducing risks. As previously mentioned, this is highly dependent on the needs and goals of the business itself; SMEs (small and medium-sized enterprises) might find it more beneficial to streamline their day-to-day tasks, whereas multinational enterprises (MNEs) might find it more useful to explore the more advanced components of automation.

Why Automation?

If you are still not convinced of the many benefits of automatic processes – you probably will be now. Besides its specific functionalities, automation also comes with other perks. Below you will find a run-through of the most common ones, which includes a lot of day-to-day, repetitive tasks:

Strategy is an action plan designed to achieve certain short-term or long-term goals. In terms of business, it can be defined as a master plan designed to gain competitive advantage, satisfy customer’s expectations, and achieve the overarching goal of an organization. In today’s competitive world and dynamic markets, strategy formulation has become the foundational aspect for any business. It is a common notion among business owners that strategy is a big large document that defines every process and operation in a company. However, there are different strategies for different hierarchical levels in an organization. A corporate-level strategy is on the broadest spectrum that defines the long-term goals of an organization. Further down the line, there are business strategies that are similar to different verticals in an organization and at the lowest level, there are strategies on the functional level that defines the day-to-day operations of the organization.

You may wonder that understanding the theoretical part of strategizing is one thing, however, formulating is altogether different. Strategy formulation has two major aspects: knowing what to do? And what no to do? At a most fundamental level, strategy is the outcome of your understanding of what you want to achieve and as a result what steps you should prioritize to reach your goal. You cannot do everything in an organization; so knowing what not to do can channelize an organization’s resources towards what to do.

Emphasizing What Not To Do

Business strategy is nothing but knowing what not to do so that you know what to do.

The right strategy entails the understanding of your customer, the products you produce, and the ways they reach your customers. Choosing a target audience and making products for that particular base is a trade-off that a company should take to formulate a well-defined strategy. For example, Facebook, in the beginning, was designed especially for students. This made it easier for the developers to decide on what kind of user interface they need or what features to put in. In short, having a target audience helped facebook’s to efficiently use their resources rather than waste them where it is of no use.

If put in simple words, once the choices are made it is the matter of strengthening the cohesion of chosen tasks and activities to achieve the desired result. A well-formulated strategy puts forth the operations that need to be performed. Moreover, it also divides the operations in terms of their priority so that the most important resources are allocated to the most important tasks.

Prioritizing is The Key

Now that you have understood that strategy helps in prioritizing operations. However, why prioritizing is important, and why do many organizations fail at prioritizing if it is important?

In an organization, various operations happen simultaneously. Within each operation, multiple choices are required to be made. Prioritizing the tasks helps in making those choices. It helps to decide the order of activities and ensure that suitable time and resources are allocated to every task.

However, prioritization is something the majority of the organization fails at. One of the major reasons due to which companies fail at prioritizing is not being able to choose what truly is urgent and eventually giving priority to the wrong areas. This can be understood from the classic example of Kodak. In the 1990s, Kodak invested billions in developing digital technology, however, they abstained from producing digital devices. On the other hand, Canon in Japan prioritized the production of digital cameras and latched on to the opportunity provided by digital photo technology. Today we all know canon is one of the largest producers of digital cameras. The scale of damage due to wrong prioritizations can be huge.

We have observed that there are two major reasons why companies fail at prioritizing:

Large businesses and organizations are a complex collaboration of various operations such as purchasing, product development, manufacturing, logistics, and services, etc. The success of a company hugely relies on the efficient coordination between these departments. Combined with the tremendous amount of data that is generated at each step, it becomes a strenuous task for a company to manage everything efficiently while simultaneously providing exceptional services. This is where digital operations can assist companies. Digitizing can streamline and simplify the entire operations, improve coordination among departments and help organizations to analyze big data faster than before.

In recent years the pressures of involving digitalization in software and hardware industries have increased considerably. Furthermore, the coming of epidemic forced more companies to have perfect digital operations to provide services to customers. Mckinsey reported the exponential rise in customer’s digital interactions in the last year. Globally, in July 2020 the average of digital customer interactions rose to 58% from 36% in Dec 2019. Moreover, the rate of adoption is also at least 3 years ahead of what they were in past years.

What Is Digital Operations?

Simply put, it is the integration of digital technologies in various operations across an organization. Digitizing redefines how an organization works, in particular, through optimization of processes across the value chain and increasing productivity exponentially. It infuses agility, intelligence, and automation in processes to come out with operational models that are consumer-centric.

The Need For Digital Operations

As per a BCG survey, almost 80% of large-scale enterprises are going for digital transformations in one form or another. When implemented right, it can lead to a 10% to 20% cost reduction in supply chains, a 15% to 30% reduction in working capital, and revenue growth of almost 6%.

High-functioning digital ecosystems enable organizations to deliver a better experience to customers. There are many ways digital operations drive the growth of a company, some of them are listed below:

• It makes operations in a company agile enough to meet the market demands in real-time. With manual work, it was a tedious process to analyze the huge data and till the time it was done, the market would have shifted. With digitization, the data can be analyzed more quickly, and the process can be expanded or contracted as per requirements.
• With more and more people shifting to digital platforms, the success of a company now relies on its digital services. Technology enables a company to reach a huge number of customers. Some examples include.

The impact of the COVID-19 pandemic on businesses worldwide is evidence of how fast the tables can turn and put businesses in stiff competition for survival. With the constantly changing business landscape, organizations need to achieve stability, especially in these trying times. Business executives, CEOs, and COOs, among other leadership positions, must wear their thinking hats and come up with sustainable plans on how to improve business agility.

Before further discuss how to improve business agility, let’s take a second to establish basic knowledge on business agility.

What is business agility? 

Business agility refers to a business’s ability to endure the storm and adapt to the fast-paced market changes. An agile business is also expected to be responsive in discharging its duties and functions, especially regarding meeting the demands of customers.

For a business to adapt to the complexities and uncertainties in the business world, it has to embrace new trends and adopt creative ideas that will boost its chances of survival and continued growth.

Why is it essential for businesses to be agile?

With all that has been happing with the pandemic in the global business stage, you will agree that the future is full of uncertainties — nobody knows what might pop up next. Likewise, there are many uncertainties about customer needs and requirements. To stay on top of the situation and reduce business vulnerability to threats, agile businesses know to adapt faster to their environment and focus on maintaining their customer base.

To successfully adapt to the agile culture, business executives and team members must be flexible and innovative in their thinking. The idea is to have a business framework that will help you build a resilient and adaptive business.

If you have followed us from the start of this discussion, you would already know that business is susceptible to changes. These changes are influenced by a tall list of factors, including economy, market dynamics, technology changes, and company growth. For your business to have an edge and give your competitors a run for their money, you need to improve your business agility. You have probably been wondering what is the big deal about business agility, and why is virtually everybody talking about it?

Improving your business agility and having an agility strategy in place will help you prepare for turbulent times in the future and adapt to the new environment. You also need to be ready to cash in on viable opportunities even before others notice them.

How to improve business agility?

1. Invest in Competitive Intelligence

One of the key areas to focus is competitive intelligence.  According to a recent research, 94% of the organizations are investing in competitive intelligence. This trend is normal considering the fact that the business world is becoming more and more competitive and organizations are proactive in leveraging the information gathered to increase business agility.

What is Competitive Intelligence?

You can think of it as a systemic approach for collecting and analyzing information about consumers, products, and your competitors, among other elements that will improve an organization’s strategic decision-making process. Competitive intelligence encapsulates the understanding of your business environment and devising means of enhancing competitiveness.

You can also think of competitive intelligence as the ability to anticipate risks and opportunities in the market and getting your business in a position for profitable opportunities before it becomes evident to your competitors. The idea behind investing in competitive intelligence is to help businesses develop strategies that will boost sustainable growth and agility while identifying and filling competitive gaps in the market.

Knowing your competitors will give you the edge to constantly enhance your business strategy and competency that will make your organization unique. Investing in competitive intelligence will help you,

• Track industry trends.
• Gather information on the competitive landscape.
• Enhance business decision that increases ROI.
• Strengthen long-term business strategy.
• Gain competitive advantage

2. Be Innovative – Think into the future

Growing and sustaining your business will continue to become more difficult as more people enter the industry. To make your business or brand stand out, you must think smart and leave no room for excuses.

If your customers request a change in your products, don’t hesitate to “pivot” because time is of the essence. You also have to eliminate all barriers that will get in your way of making improvements. For long-term growth, you have to consistently innovate the products and services that add value to your customers.   

Innovation should not be restricted to just products and services, you will have to expand the scope and look at new ways to,

• Improve processes and operations.
• Upskill employees to drive innovation.
• Create a high-performing agile culture.
• Understand customers to drive innovation.

Being innovative will help you strengthen your brand identity, implement agile operating models, develop superior products and successfully execute strategic transformational activities.

Innovation is essential to increase business agility to move ahead of the competition and accelerate your business growth.

3. Strengthen Organizational Capabilities

As you may already know, having capabilities and not using them has little or no impact on businesses’ growth and development. It is how organizations manage and utilize their capabilities that impact the value and outcome of their operations.

An organization may decide to rethink its business model and processes or re-evaluate people skills and competencies, physical facilities, reward system, and organizational structure, among other aspects of its operations.

While businesses strive to deliver value in response to new trends and changes in customer demands, business leaders must invest resources in building sustainable organizational capabilities. However, building sustainable organizational capabilities is not a walk in the park. It takes commitment and focus to enhance the capabilities. Identify weak areas and other business capability areas that need improvement. Develop a plan to improve the capabilities and manage the change that comes with the process.

The goal should be to constantly identify areas of greatest needs and devise innovative means and channel resources to improvise and strengthen the capabilities. Making the most of organizational capabilities will help you improve market value, and it will shape the leadership, culture, competencies, and performance management of your organization.

4. Increase Operational Flexibility

Operational flexibility is necessary for organizations to adapt to potential challenges that may test an organization’s wit.

To ensure that an organization is going about operational flexibility correctly, there are essential questions that must be asked. That way, you will be able to satisfy the dynamic market and customer demands. You should be able to tell what an organization’s day-to-day operations look like, determine how you can maintain flexibility while adapting to changes, and prioritize projects in the course of adapting to changes in the business environment.

Operational flexibility allows you to adapt to the evolving economy and keep up with the pace of modern trends. On your journey to achieving operational flexibility, you must learn not to fight change. It would be best if you have an open mind towards practical ideas.

In addition to evolving with the economy, achieving operational flexibility becomes easier when you attract and retain the best employees, work towards efficiency and have complete control of cost reduction and control processes.

One of the essential factors to consider is getting the best crop of employees for your company. Hiring the right people and investing in them will help you build a synergized and goal-oriented team that will propel your business growth through increased efficiency, productivity, and unrivaled quality.  

In conclusion

In this ever-changing business world and uncertainties, organizations are constantly faced with a common challenge to change their business strategy. Not being able to change and adapt quickly will only increase the risk of failure in business. Being agile and resilient will help you overcome challenges, better position your business, stay competitive and consistently grow.

Often, most people interchange process excellence with operational excellence, probably as an innocent mistake, or they don’t understand the difference between them.

As a business striving for excellence in the IT space, you must clearly understand every aspect of your business and the factors that affect your business growth. While process excellence and operational excellence may have striking similarities, it is advised that you grasp the difference between them.

Operational Excellence Vs Process Excellence

You can think of operational excellence as the aspect of organization leadership that emphasizes the implementation of different principles, skills, and tools intended to help organizations improve key performance metrics.

On the other hand, process excellence hinges on process efficiency and effectiveness. You can think of process excellence as a series of approaches to improve the quality and efficiency of your business output (either products or services).

As an industry leader, you should be familiar with total quality management, six sigma, business process management, lean, and business performance improvement, among other methodologies. The question is, what do they all have in common? They all focus on the business process. More like an activity or series of activities intended to transform your business. You will be correct if you say process excellence means improving your business and providing the most value for customers.

Key factors of process excellence

1. Always Put Your Customers First

The first step in ensuring process excellence is to put your customers first in whatever you are doing. Your primary concern is to add more value to your customer experience by engaging them in discussion/dialogue to find out what they like about your business and address their pain points.

Businesses exist to satisfy customers. Because of customers’ role in “keeping businesses in business,” it’s easy to understand why they are regarded as the most valuable people to a business. You will agree that customers can either make businesses successful or unsuccessful. As such, the famous maxim about customers being king should be your business slogan and watchwords.

Putting customers first helps you to understand their needs. Not doing so will jeopardize the growth and sustainability of your business. Putting your customers first involves giving them special treatment and executing strategies to keep them glued to your business and prevent them from looking elsewhere. Winning customers’ trust makes it easy to interact with you and share lots of information with you, including their pain points, expectations, and how they think you can improve your products or services.

Actionable steps to put your customers first include selecting the target audience (by demography, lifestyle, psychographic or how customers react to your products (usage and attitude), creating a customer persona, and adopting a customer-oriented approach in your business, invest in providing a personalized experience and providing exceptional services.

2. Create a Culture of Process Excellence

Creating a culture of process excellence involves getting all hands in your organization on deck and geared towards improving the business’s performance. As a business owner or leader, your primary concern should hinge on implementing problem-solving techniques and aligning processes and people to achieve excellence in business.

You would have succeeded in creating a culture of excellence if you can change how people work and behave in the workplace. Process excellence extends to getting employees to learn and adapt to new methods of solving problems, enhancing business performance, and aligning workplace culture with your business goals and strategies.

Creating a culture of process excellence offers ample benefits. They include improving teamwork and leadership, boosting productivity through employee empowerment, streamlined and efficient processes, and paving the way for a smooth growth and expansion trajectory.

3. Identify Process Inefficiencies

Running a successful business is for business executives and managers to cultivate a workplace culture that enhances processes and operational performance, empowers employees, and boosts productivity.

While you are at it, you must be proactive in detecting inefficiencies.  And as you can imagine, constantly analyzing processes to identify inefficiencies is not a walk in the park. It can be a very complex undertaking. However, if you don’t get on top of your business process’s inefficiencies, it can give your business a nasty blow and probably cause your business to nose-dive.

Having mentioned that, inefficiencies in business process and operations can result in missed deadlines, pressure on staff, disorganized workflow,  compliance issues, and dissatisfied customers. The only way out is to implement systems to have a periodic audit of the end-to-end process to spot inefficiencies and execute plans to make the processes efficient.

4. Upskill and Empower People

From putting your customers first to creating a culture of process excellence and identifying inefficiencies in your business processes, the factor to consider while improving process excellence is empowering people— your employees.

Upskilling involves providing employees with advanced skills — it can be in the form of training. Upskilling is vital for making businesses relevant. It comes in handy in bridging the gap between people and the fast-paced technological revolution in workplaces. You can think of upskilling as a means of filling skill gaps in an organization.

While you are at it, you must have it in mind that hiring employees digitally savvy is critical to helping businesses stay competitive in today’s technology-driven business landscape. Other approaches to upskilling and empowering employees include connecting them to mentors, using real-life simulations and case studies, encouraging self-training, and imbibing a learning culture.

Investing in upskilling and empowering employees will help you strengthen your business capabilities and make your journey towards process excellence easier. By empowering your employees and upskilling them, you can conveniently improve productivity, build confident teams, improve business agility (adapt to changes and leverage new technologies), help employees develop soft skills, and groom future managers.

5. Performance Monitoring

Keeping close tabs on your business performance is an excellent way of assessing your operations and process efficiency. It also provides an opportunity to evaluate employees’ performance. Another reason why it’s essential to monitor your performance is to spot mistakes and inefficiencies in your business process and take steps to plug every loophole.

A proactive approach to constantly measure performance is necessary to identify whether the new process is producing the desired results or not. Doing so gives you the timely indication to continue or change the process to avoid breakdowns. Additionally, it will help to move in the right direction to achieve your business goals.

Monitoring business performance also involves assessing employees to determine their level of performance or input. For instance, frequent performance assessments will help employers tell whether an employee is efficient in discharging his/her duties, is working in a safe environment, and keeping to schedule.

If things are not going as they should, the company or business owner can step to correct any faults and provide employees with all they need to work at full capacity. And eventually, turn them into assets for the organization.

The benefits of process excellence

As technology continues to gain more traction and enjoy more relevance in virtually every facet of human endeavor, businesses are in stiff competition and are constantly changing their tactics to beat their competitors. Speaking of beating competitors, one way to go about it is yearning for process excellence. Paying more attention to achieving process excellence offers so many benefits.

They include:

• Improved productivity
• Increased employee satisfaction
• Increased customer satisfaction
• Reinforcing agility
• Smooth integration of technology
• Reducing the risk of human error
• Maintaining standards

With all of that, a business can improve work output, deal with inefficiencies, reduce process completion time and prevent waste. Regarding productivity, process excellence can help you boost productivity by integrating technology into your business and ensuring high customer satisfaction.

A recent study by Microsoft showed that at least 90% of consumers would rather take their business elsewhere than work with an organization that uses outdated technology. That means that leveraging technology in your business will help you save time on administrative tasks and focus on building experience with your customers. And hopefully, deliver a personalized customer experience and exceed expectations.

We are rounding off

Because process excellence is an essential aspect of building a profitable business, you must adopt proven business models and principles to bring sustainable growth to fruition.

Popular methodologies that can help improve process excellence include but are not limited to lean manufacturing (which seeks to eliminate wastage during production), six sigma (which is intended to remove defects and improve process capability), and kaizen or continuous improvement (which leverages process excellence to build sustainable growth).

To answer the question “if process excellence matters,” yes! It does. And businesses seeking growth must invest in achieving process excellence.

The goal of every business owner is to cut costs and maximize profit. By business, we mean businesses across all facets of human endeavor, including those in the computer hardware and software industry.

Considering how the pandemic has thrown a big wrench into the working of virtually all enterprises, businesses are looking for the most effective means of cutting cost, and one idea that always comes up is reducing operational cost.

Before we discuss operational costs and tips on how to reduce them without hurting your business, let’s take a second to clarify between cost control and cost reduction.

Understanding the difference between cost control and cost reduction

While it’s understandable why both terms are often misinterpreted, there is a clear-cut difference between them.

To save you all the economic and technical jargon, you can think of cost control as a technique that provides you with all the information you need to manage costs accrued to your business either directly or indirectly and whether the costs are budgeted or not.

On the other hand, cost reduction deals with the technique you can employ to cut unit costs on your products or services without compromising their quality.

We are taking our discussion further — tag along!

From our definition of cost control, you can deduce that cost control is a process that is intended to give you an overview of the total costs that go into running your business and can be gotten via competitive analysis.

You can think of cost control as a safeguard to prevent you from shooting beyond budget — not exceeding predetermined cost.

To ensure that you don’t exceed your budget for production, there are many activities to follow. They include developing a plan, evaluating the budget’s actual performance, and correcting any discrepancies in your plan.

What is cost reduction?

As we hinted earlier, cost reduction is intended to cut costs per unit product or service without compromising its quality.  With cost reduction, you can easily find alternative means of reducing production costs on each product unit.

What does that mean for businesses in the computer hardware and software industry?

In the IT industry, where the demand for computer hardware and peripheral devices are on the rise, your aim as a business person is to cut unnecessary cost — production cost, storage/warehousing, and distribution.

Remember, the purpose of cost reduction is to save cost per unit production and not compromise quality. There is a highlight of the differences between cost control and cost reduction before we round upon cost reduction and cost control.

Five key steps to reduce operational cost

Regardless of your business niche, your primary goal as a business owner is to reduce operational costs minimum. What that means for business executives is that you have to come up with a clever plan to save money on production and not negatively impact the business.

If you are looking to cut costs in business, there are ways you can achieve that.

1. Automate Process

A recent study by Forrester showed that at least 22% of businesses are experiencing slow growth and less revenue because they have not achieved performance excellence and workflow automation.

Among other factors that affect business growth and productivity, workflow automation will help you ramp up revenue and boost customer satisfaction. And if you can build a large community of happy consumers, you can improve process excellence without breaking a sweat.

Business process automation (BPA) is not a Herculean take, and neither is it rocket science. It involves using technology to speed up the rate of task completion. Business automation saves you the cost of repeating specific tasks over and over again. It replaces the stress and cuts expenses and manual effort that comes with repeating tasks. 

In addition to cutting cost, other benefits of business process automation are that it results in streamlined processes, it boosts customer satisfaction and increases efficiency and ensures standardized operations.

2. Consider Outsourcing

To keep up with customer demand and not lag in meeting modern trends, businesses now have to consider outsourcing as a part of their strategy to increase efficiency and promote business growth. If outsourcing plans are adequate and are thoughtfully implemented, you will be awe-struck at the tremendous drive in productivity you will experience. Outsourcing enables you to focus on other aspects of your business that is more impactful and requires more attention and inputs.

From whatever perspective you look at it, outsourcing is intended to increase profit margin, low operational costs, and labor expenditure. As profitable as outsourcing may seem, it’s advised not to outsource core aspects/activities of your business. Core activities are best handled in-house because they are your trade secrets, and you can risk having them get to the wrong hands — say, your competitors.

Besides cost-efficiency, other factors to consider while outsourcing include how it will affect your business reputation, innovation (will outsourcing help you overcome in-house restraint on innovative thinking?), and how long will it take to complete a task. Having mentioned all of that, you should always consider outsourcing a tool and ask yourself if outsourcing will help you save time and money because those are the main factors that will affect your business and promote growth.

3. Reduce Infrastructure Cost

If you are looking to keeping your business afloat in the modern business landscape and survive the stiff competition, you need to invest more in reducing infrastructure costs. One way to cut costs on infrastructure and not suffer setbacks is by adopting IT solutions. As more businesses begin to realize that it’s possible to cut down infrastructure costs and still meet customer demand with the aid technology, companies are increasingly investing towards that end.

A recent CIO magazine survey showed that small businesses spend over 6% of their revenue on IT infrastructure (outside the 6% to 6% recommended range). The survey report also revealed that medium and large businesses and an average of 4.1% and 3.2%, respectively. While spending on IT infrastructure is vital to a business’s success, you must be careful not to go overboard. It would be best if you reduced Infrastructure costs before it runs your business aground.

Typical means of reducing IT infrastructure costs include virtualization, outsourcing IT staff and services, adopting hybrid cloud technology, outsourcing security services, and consolidating systems.

4. Cut Production Costs

It’s almost impossible to discuss reducing operational costs without mentioning a reduction in production cost.

Business in the computer hardware and software industry (especially those that are into manufacturing) will appreciate the idea of cutting production cost better since they deal with procurement and conversion of raw materials into finished goods. And because production cost encompasses material cost, direct labor cost, and manufacturing overheads, you imagine how much relief you will enjoy if you can efficiently cut production costs.

The reward for business is profit, and there are two ways of maximizing profits: increasing selling price per unit and reducing costs.

A common way of reducing manufacturing costs includes keeping tabs on records. You need to pay attention to the numbers —reduce production capacity, direct labor and material costs, labor efficiency, manufacturing overhead. Having tracked figures from your records, you can reduce direct material costs and reduce carrying costs on inventory such as warehouse staff cost, stock insurance, warehouse rent, insurance, warehouse maintenance cost, and money held in stored inventory (opportunity cost).

Other ways of cutting production costs include eliminating non-value-adding processes, increasing workers’ efficiency, and leveraging automation. Once the comprehensive analysis is complete, it is much easier to know what needs to be done to improve strategic positioning. This will look different for every business but the work will pay off when a key differentiating point can be properly utilized. Specializing in solving a particular problem for a particular customer segment will be much more lucrative than trying to appeal to massive amounts of consumers.

5. Reduce Surplus Expenses

Reducing surplus expenses is an excellent way of reducing operational costs. Recall that operating cost covers all the cost incurred in the day-to-day operation and maintenance of the business. Speaking of operational expenses or operating expenses, we are talking about labor costs, employee insurance, other benefits, maintenance cost, amortization, commissions, and depreciation.

Keeping track of operating costs will give you insight into how to avoid and cut surplus expenses. Thereby improving your productivity and profitability.

Reducing surplus expenses will make you profitable and give you an edge over your competition. While reducing surplus expenses, one has to be careful not to compromise the quality of your products/services or put your employees under undue pressure. You can reduce surplus expenses by embracing technology, outsourcing, negotiating better deals, work remotely (telecommute), cancel unused services, and avoid debts.

We are rounding off

There are a thousand and one advantages of reducing your operational cost and on top of the list is that you will save enough money for other commitments.

In addition to the steps on reducing operational costs we just shared with you, other tips you should have in your checklist include renegotiating contract terms and conditions, getting alternative suppliers of materials, changing your business location, and investing in the right machinery and equipment to ensure timely production.

Knowing how you stack up will help you stand out

When sales are down or business is moving too slowly, it is inevitably time to reevaluate the business strategy. However, navigating a business strategy without considering strategic positioning is like trying to climb a mountain with no compass or map. There’s a possibility to reach the peak but it’s more likely that you will get lost, waste time, energy, resources trying to get there and get frustrated for not carrying the tools to effectively navigate the journey.

Just like climbing a mountain requires a map or a compass, a business requires a crystal clear plan and foundational principles to grow and prosper. Strategic positioning is a vital element to this.

What is strategic positioning?

A strategic position is how a company is viewed by customers. It’s the image and perception of the product or service. Strategic positioning is also a company’s relative position within an industry based on the product’s quality, features, and price. It is achieved through the choices a company makes about the kind of value it provides and how that differentiates from the competition.

Why strategic positioning is important?

Even if a business has the best product on the market, by all counts, it will not sell unless the brand or reputation stands out in the customer’s mind. As per Lucidpress, brands that are consistently presented see an average revenue increase of 33%. In the case of manufacturing or information technology companies, reputation is still integral to increase sales and overall profitability.

Aside from managing reputation, strategic positioning gives companies vital information to build a robust strategy and operations. Generally, companies that value cost leadership focus on low-cost and efficient production. Companies that value differentiation put a lot more effort into marketing, packaging, and customer-facing activities. Using either cost leadership or differentiation as a competitive advantage can lead to outperforming the competition. Long-term success essentially boils down to having strong foundations on which the company’s identity and approach rest on.

Two propositions can help simplify the dialogue and help lay the foundation for a business’s strategy and operations. A solid Unique Selling Proposition (USP) and a specific Positioning Statement will do just that. A USP is a brand’s feature or characteristic that differentiates it from similar alternatives. It’s a unique offer to convince customers to choose this brand over the others. The positioning statement will summarize the target market segment, the problem solved, how the solution is provided in a different way than the competition, and how this affects branding. Together, these tools clearly define the why and how of a business.

From these core principles, business strategy and operational changes can be made effectively. The story and purpose of the company will become infused into everything else. Not only that, but it will help implement abbreviated decision-making at different management levels. That way, it becomes easy for decision-makers across all levels to carry out the vision for the company. The effects of a strong USP and Positioning Statement can help a business reach sustained growth, build a loyal customer base, and find a niche in which to thrive in.

How to determine the current strategic positioning? 

To improve a strategic position, the current one needs to be determined and analyzed. Also, having a deep understanding of the marketplace to compete is essential. Here are some steps to get a comprehensive analysis of a current position.

• Identify Strategic Issues – Create a summary of critical areas that need to be addressed. Ask some key questions,
• • What is the company’s current position?
  • Is the company targetting the right customer segments?
  • What is working? What isn’t?
  • Is the product/service providing value to the customers?
  • Is there a need to change the strategic positioning to become more competitive?
• Run an Environmental Scan – Run an analysis of Political, Economic, Social, and Technological trends (also called a PEST analysis). This will determine the environment the business is running in and the influences that can affect it.
• Complete a Competition Analysis – Understand what the competition offers and compare it to the business’s competitive advantage. It’s not advised to depend too much on responding to the competition or follow them. The objective here is to be aware of the competition and use this information to differentiate the business.
• Develop SWOT – Find any opportunities that can lead to growth and any barriers that might get in the way of business objectives. Be aware of the weak areas and what the company does well that can be used to bolster the organization’s competitiveness. This analysis will help develop a cohesive strategy.

Once the comprehensive analysis is complete, it is much easier to know what needs to be done to improve strategic positioning. This will look different for every business but the work will pay off when a key differentiating point can be properly utilized. Specializing in solving a particular problem for a particular customer segment will be much more lucrative than trying to appeal to massive amounts of consumers.

How to improve strategic positioning?

Simply put, this concept helps customers distinguish what one company offers that’s different from the rest. There are few ways to do this. The strategies companies use to base their position can vary by the goal, intention, and the very nature of the product.

• Product Characteristics- Choosing differentiation based on product characteristics associates the brand with a particularly beneficial feature. For example, it can be safety, security, aesthetics, or reliability.
• Price Positioning- Choosing a position based on price associates the brand with being cheap and accessible for bargain-hunting customers. Firms in this category usually try to be the cheapest and achieve this by minimizing overhead and distribution costs.
• Quality/Luxury- Choosing to be a quality or luxury brand as a distinguishing feature associates the brand with a high or premium price and increases reputation. Prestige is a priority to entice customers wherein the customer views the brand as an elite status symbol.
• Application/Use- Utility as a distinguishing feature associates the product for a particular use i.e associating the brand or product with a specific use.
• Competition- Brands can respond to activities made by the competition to try and get more of the market share. They can bring attention to a key difference in their product or service to seem more attractive and unique compared to other options.

Summary

Companies can benefit immensely from strategic positioning. By completing a thorough analysis of the environment, competition, and the company itself, it will become clear what unique offers can be made to attract customers. A thorough analysis will give a clear picture of the capabilities and resources a company has and what problem it could solve for a specific target audience. By writing a USP and Positioning Statement, the foundational groundwork can be completed for building a robust strategy. This will help create a powerful strategic plan that will accelerate the business’s performance. This concept can lead the company to growth and optimal health- that’s why strategic positioning matters now, more than ever.

Building a sustainable supply chain is essential for the longevity and success of the business. Pressure from investors, customers, and stakeholders to create a sustainable supply chain has increased over the years. To build a sustainable supply chain, many environmental, economic, and social elements can be managed and improved to optimize processes, find new product innovations, save costs, and conserve resources.

Creating sustainability in the supply chain is a continuous ongoing process to consistently enhance the system that will lead to a robust and sustainable supply chain. However, if companies are not building with sustainability in mind, this could be a huge potential risk to the future of the business.

Here are six key steps to build a sustainable supply chain:

1. Visualize The Process

Understanding, planning, and building the supply chain or proposed supply chain is a vital first step.  Companies won’t be able to improve their supply chain process if they don’t have a visual or map of the actual process. This makes analyses of the supply chain a lot harder, especially if it is a global company or a complex supply chain.

This is a true starting point as a map will help find risks and inefficiencies in the supply chain process. The supply chain map will show how resources are being used every step of the way and help identify challenges or hiccups that are slowing down the production process. It also provides a framework for every employee in the organization to understand how the flow works and how it impacts the customers. This is extremely important as each employee realizes the importance of the processes and value provided to the customer.

2. Forecasting Customer Demands

Supply chain organizations have ranked forecasting demand as a major challenge in meeting their supply chain goals. Forecasting is a vital component of supply chain strategy to ensure sufficient inventory levels are maintained to meet customer demand. Forecasting gives an estimate of the number of products the customers will purchase in the near future. This data allows organizations to proactively prepare and work on,

• • Strategic activities like budgeting, financial planning, risk assessments, and devising mitigation plans or any expansion planning.
  • Operational activities like material planning, purchasing, production planning, logistics, and resource planning.

Sustainability is providing what customers want from the business without any surplus products. Creating products that don’t sell is a waste of time and money. Predicting the demands will enable organizations to deliver the right product at the right time to the customers.

The use of appropriate forecasting tools and methods will help in estimating the demand and developing a plan to drive a seamless supply chain process. The key is to choose the most effective and flexible methods/tools to ensure forecast accuracy. Using data and analytics can further help in ensuring a more efficient and sustainable supply chain.

3. Effective Collaboration & Setting Expectations

Collaboration should be the core of the business. Encouraging an open feedback culture in the company will allow for the collaboration of different departments to find solutions to any issues in the supply chain. When employees can voice concerns and feedback without repercussions, companies can find unique solutions to their problems. Encouraging open collaboration between different elements of your supply chain will grow the effectiveness of the entire supply chain process. According to Salesforce, 86% of employees and executives cite lack of collaboration or ineffective communication for workplace failures.

Setting expectations about your supply chain is imperative so that your stakeholders are on the same page about the status of the company. Do not over promise and under deliver. By having open discussions about goals, problems, and wins, companies can reassure the stakeholders of the future and viability of the company. Being transparent increases the trust among the stakeholders.

4. Leverage Technology

Technology assists in improving the supply chain process by automating and simplifying the entire process. Technologies such as Robotic Process Automation (RPA), Internet of Things (IoT),  should be leveraged to automate and streamline the processes to enhance productivity and efficiency. By automating parts of the business that are mundane and repetitive, the employees and business can focus on big picture goals while gaining a competitive advantage over the competition.

Technology also allows companies to evaluate and analyze processes such as transportation management, inventory management, and order management. Additionally, technology enables communicate effectively by instantly and seamlessly connecting with different parts of the supply chain process.

5. Train & Educate Employees

Employees are the most important assets. They are the reason companies can scale the business to a higher level. Creating a culture of open feedback and education equips employees with the resources they need.

Invest in a consistent and thorough training program for the employees to make sure that every employee understands the mission, vision, business processes, and organizational goals. According to ClearCompany, 68% of employees say training and development is a company’s most important policy. Employees want to do a good job but need to be equipped with the proper knowledge and skills to effectively carry out the company’s vision and mission.

Providing proper education and upskilling employees on various supply chain best practices, technology, and other techniques will create a solid foundation to build capacity for the business. When employees are properly trained, every part of your supply chain can function efficiently and profitably.

6. Measure Performance

There is always room for improvement in the supply chain with both internal operations and supplier performance. Companies should track and leverage data to spot any inefficiencies in the operations, improve the overall performance of the supply chain, and increase customer satisfaction. Check the internal structure to see how employees function. Evaluating productivity and efficiency, eliminating outdated processes, collecting employee feedback, and analyzing data can help businesses fix bottlenecks/inefficiencies and find areas of opportunity in the supply chain process. 

Evaluate supplier performance. Are they providing the type of quality, quantity, and timely delivery that is expected? Keep track of which suppliers work well with the business and develop a deeper relationship with them. Only work with suppliers that meet the requirements and can help to scale the business in the future. Re-evaluate partnerships that don’t benefit the companies mission.  

Lastly, evaluate how the company is functioning compared to the direct competitors. Are there any industry best practices that could positively impact future business? Is there anything to learn from the competitor’s mistakes to protect the business? Knowing and understanding your competition can help maintain a sustainable supply chain.

Summary

Building a sustainable supply chain is imperative for the future success of the business. Focusing on these steps will help strengthen the supply chain process to consistently meet both organizations and customer demands.