Business is fundamentally (admittedly among other things!) about maximising surplus value and productivity while minimising the cost of everyday operations. However, one important variable that cannot be neglected under any circumstance is quality. So how do we achieve both efficiency and quality?
Business owners who wish to excel must appreciate that while efficiency is key to ensuring maximum revenue, the quality of a service or product must not suffer as a result.
Striking the balance right is, arguably, one of the most difficult challenges of doing business.
This article will attempt to demonstrate the importance of achieving a successful balance of efficiency and quality, and will look at some of the productivity improving techniques employed by major companies to ensure such a balance and also provide some advice to those starting up in business for the first time, and attempt to reconcile the twin factors of efficiency and quality.
An argument for quality
Scholars writing for the Harvard Business Review recently observed that on finding themselves in times of economic difficulty many businesses naturally cut back on overhead costs and, as a result, quality. The same enterprises subsequently invest heavily when times get better, only to find that they cannot achieve the levels of success they enjoyed before cuts to operations costs were made.
Writing for the Harvard Business Review, scholars Kovac, Chernoff, Denneen, and Mukharji argued that this natural, but short-sighted, approach is wrong. After trying times have abated, subsequent investment is often committed too late to win back those consumers who were previously alienated when they found the quality of the service or product to be compromised.
Their conclusion is simple:
the balancing act is hard, but is important to get it right in order to avoid employing efficiency increasing measures that damage the overall quality of a product.
Short-termism offers poor solutions to a fundamental challenge of business.
Many people, given the choice, would rather dine out at a high-quality restaurant where they feel they get the absolute best a business can offer while it still turns a profit, than spend money in a business that does not comparably value the objective quality of its product, regardless of its efficiency. Consumers value quality for money above all else, and the prudent business owner must appreciate this if they are to be successful.
The balancing act
Aldi is an outstanding example of a company that successfully balances efficiency and quality. It does business in the incredibly competitive market of food retail, and goes up against some of the most prominent names in commerce. In order to maintain quality and efficiency of operations, it employs a number of techniques. The company commits to ‘lean production’, which boils down to getting more for less.
The Times describes the method as
“eliminating waste and therefore using less labour, materials, space and time”.
“Lean production” is used successfully by large corporations like Aldi to great effect, and is a means by which businesses can achieve efficiency and maintain product or service quality.
The following are some aspects of the ‘lean production’ method, and can easily be applied to the everyday operations of your small or new business in order to afford both high quality and efficiency:
● Employ a multi-skilled workforce
Spending money and time on training your workforce to possess a number of different skills can be beneficial in the long-term. For example, if your workforce does not have to divide the tasks and labour involved in operations, the everyday running of business can become a more efficient affair.
Aldi and many other major retailers are known for employing ‘just-in-time’ deliveries of products, which are dispatched from suppliers with as little time between delivery and sale as possible. The result of this is that the business can use local produce and save money on transportation and delivery costs. This marries efficiency and quality together competently and can be employed by smaller businesses in order to trim waste. It also eliminates the need to retain large stock reserves.
● Time based management
Aldi avoids the costs accrued as a result of maintaining 24-hour trading, unlike many of its competitors. This means that it saves money on utilities bills, labour costs, and is more productive during open hours. The smaller business can benefit considerably from this technique, by identifying when premises should be open for business, and when the consumer base is most prepared to interact with your enterprise.
● Minimise staff numbers at the correct times
Good planning means that many businesses can reduce waste by employing workers as they are needed. ‘Skeleton staffed’ businesses, if they can afford to train a multi-skilled workforce, can save a great deal and improve efficiency drastically.
● Space reduction
Many businesses can improve the efficiency of their operations by reducing the cost of potentially redundant office space. The space your employees inhabit should be viewed with a critical eye in order to determine whether or not efficiency could be improved as a result of moving to smaller premises. Additionally, your business may benefit from the virtues of videoconferencing, Skype calls, and online collaboration; all of these things help to eliminate the need for unnecessary office space, as employees can increasingly work from more remote locations.
● Emphasise teamwork and coordination
Collaboration between your employees is essential if efficiency is to be achieved without the expensive of quality. Business magazine ‘Advantage’ suggests cooperation between employees as
“looking at overall business processes and reducing errors and defects”
● Use a minimum of resources
Businesses, particularly small businesses, should use as little material, capital, energy, and effort as is needed in order to develop a good product. Excessive raw materials, mistakes, too much inventory, too many employees, allowing for inefficiency in work and spending without due consideration are all, in their own way, wasteful.
Ultimately, the balancing act of maintaining both efficiency and quality is a difficult one, but also unavoidable. The small business owner and the startup entrepreneur alike can learn from both theoreticians and large-scale corporations, who both realise that while efficiency is vital, product quality cannot be neglected. To achieve success, the business owner should acknowledge the virtues of ‘lean production’, and act upon its tenets.
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