Application of Best Practice process, procedures & methodology to project, manufacturing and service orientated organisations positively impacts profitability, stakeholder satisfaction and overall company performance. A very broad topic covering a myriad of functions and disciplines, we simply call it Value Creation and Value Retention.
Value Creation
Value Creation is maximised by applying best practice to pre-contract phases. Commencing with marketing and working through sales and handover to the companies delivery arm. Value is lost if a company does not utilise best practice. In truth, the company will not even appreciate the value they are losing.
Symptoms of not applying best practice will often include a poor order conversion rate. Unqualified prospects consume sales resource for which orders may never eventuate or which the company does not have adequate products or solutions to win. Unguided sales resource will always be busy, but not necessarily productive.
Optimal solutions or products will not be developed if appropriate resource and check points are not included. This may result in losing the business or worse still winning the business only to experience significant warranty issues or be subject to a legal case.
Project, manufacturing and service contract opportunities draw significant resource and bear a large opportunity cost. It is imperative that leads be qualified, appropriate sales strategies implemented and relevant resources applied to the opportunity. Efforts must follow a structured, methodical and proven process.
Suppliers and subcontractors play an important role in securing an optimal cost position and as such should be pre-qualified. Formal bid invitations must be concisely and accurately prepared including scope, schedule, T&C's etc. It is extremely important to carefully review subsequent tenders for completeness, accuracy and exclusions.
"Best Practices" should be adopted up to and including Proposal review and Bid / No Bid meetings. Whilst there are too many discrete examples to list in this article, the majority of companies can benefit by reviewing their processes and implementing best practice if they are to maximise value created during the pre-contract phase.
Value Retention
Value must be retained throughout delivery of the product / works. Additional value will be created if appropriate processes, practices and skilled resource is used.
Value Retention processes and procedures are normally specific and tailored to the industry and products / services / projects provided.
However, there are some generic procedures which should be rigidly followed. As an example, many companies make the mistake of accepting the customer's order without review or qualification. Often a grateful salesperson will thank the customer for their order and state that the company will get straight into delivery etc. This is a dangerous practice and should be avoided at all costs. There are ways to thank a customer without outright order acceptance. It is imperative that the order be formally accepted after careful review for completeness, correlation with the proposal, and identification of any unfavorable T&C's which supersede or replace the proposal T&C's. In the majority of instances, formal acceptance of a customer's order will require a number of qualifying statements.
There are too many examples of Value Retention best practice to list here. At least 65 examples leading up to Practical Completion immediately come to mind. If you experience profit erosion during the course of delivery / execution, you will undoubtedly benefit by implementing best practices to retain value.
Where to from here
Every company is different and opportunities vary within each company. If you are serious about increasing Value Creation and Value Retention we suggest you engage a professional firm to review your current practices, results and approaches and work with you to improve same. Up to 5% additional EBIT may be realised by companies adopting best practice.
Tidak ada komentar:
Posting Komentar