Optimising What? Why Business Transformations Fail?

Optimisation has always been a hot topic for strategists and business transformations executives. Now, as the mantle for leading corporations is moving from strategists to the integrationists and supply chain leaders – optimisation is hotter than ever before. When discussing business transformations, in my workshops, presentations and speeches, in particular I enjoy the audience interaction and questions. It does bring out many critical points that may lie embedded inside people’s minds as assumptions. Everyone is talking about optimisation at these events today. The assumption being, there is just one kind of optimisation. The example I gave in a recent workshop, and in my speech at the Quintiq World Tour, to highlight various levels of optimisation was that when I was a second officer, as a navigation officer of the ship I was in charge of optimisation of the route from a series of loading ports to a series of discharge ports. In most cases this job was relatively simple (if you knew elementary chart work and navigation). When I grew in rank to the chief officer, I was optimising the cargo flow as well to make sure that the loading operations, discharging operations and stowage were carried out optimally to minimise the time taken and maximise the cargo throughput within that time. As a master the job expanded to include optimising the cost of the voyage by minimising the fuel consumption (about 33% of the operational cost) and maximising the charterers’ results. As is self-evident, multiple layers of optimisation are added on top, as the complexity and responsibility grows. From costs of one ship, you can increase it to the cost of the entire fleet, and then add on costs of the land freight to create an end-to-end freight picture, and further add on cost of warehousing and storage to optimise the logistics costs. Further on, you can optimise the entire distribution network by relocating your distribution centres, and then start talking about optimising your inventories and move into the realms of supply chain optimisation. Taking it further, you can include the procurement – order placement, receipt and putaways, demand forecasting and shaping, supply planning – production and fulfilment to essentially optimise the basic supply chain. But now, leading companies are not only optimising basic supply chain, they are also moving into collaborating with finance to optimise budgeting. Many are also collaborating with their suppliers and customers to optimise product development, research and marketing. Yield management and customer behavioural analysis helps optimise the price at the point of sale and targeted coupons and offers. Combining revenue optimisation with the cost optimisation can lead to profit optimisation which can move beyond dynamic pricing to supply chain segmentation of one. The key point of this article would have been clear by now – everyone talks about optimisation. What matters more is WHAT ARE YOU OPTIMISING, AND HOW WELL ARE YOU DOING IT? I have already written article How good is your optimisation? to cover the second part of this question.

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Vivek Sood

I write about "The Supply Chain CEOs", "The 5-STAR Business Networks", and, how to "Unchain Your Corporation". In my work, I help create extraordinary corporate results using several 'unique' supply chain methodologies. Contact me for interesting, high impact projects, or, to get access to my IP for creating transformations using these methodologies.

  • Javier says:

    For companies that don’t want merely to succeed in their industries but to lead them, the continual business transformation is a must. Business transformation can mean everything from a major shift in IT systems to a large-scale innovative construction project or changes to business models and product designs. Similarly, the drivers of transformation vary widely, ranging from the increased globalization of markets in all industries to shifting energy prices to consumer expectations of constant innovation.

    Combining revenue optimization with the cost optimization can lead to profit optimization which can move beyond dynamic pricing to supply chain segmentation of one. The key point of this article would have been clear by now – everyone talks about optimization.

    Anyway, your Knowledge is very vast in the field of supply chain I have read one of your book named “Unchain Your Corporation”. Keep doing the great work Mr. Sood Waiting for your more books to be launched

  • […] and supply chain leaders – optimisation is hotter than ever before. When discussing business transformations, in my workshops, presentations and speeches, in particular I enjoy the audience interaction and […]

  • […] and supply chain leaders – optimisation is hotter than ever before. When discussing business transformations, in my workshops, presentations and speeches, in particular I enjoy the audience interaction and […]

  • Maya says:

    A business can achieve maximum overall efficiency through ensuring that all contributing elements, from time to processes, equipment, and team members are all working in sync effectively, with minimal errors or wastage. This is, perhaps, achieved via business optimization. In essence, business optimization is a management strategy where you construct new processes and develop new resources in order to make a business as effective as possible. It’s about finding the optimal alternative with the most cost-effective or highest achievable performance, under the given constraints. Achieving business optimization entails maximizing desired outcomes or factors while minimizing undesired ones. It ensures that every element of your business is leveraged and used with maximum efficiency, putting your business in an ideal position to make the most of the future and upcoming opportunities, demand or market changes.

  • Quinn says:

    Business optimization is always a good option but it works well when you know what to optimize. If you know what in your business need to be optimized, you can achieve success. The optimization can change the management mindset change. As senior management is encouraged to get back to basics and eliminate ineffective processes, it creates an environment of ongoing monitoring, analysis, and adjustments to ensure maximum effectiveness. It also boosts efficiency as efficiency is achieved via the elimination of ineffective systems and increased automation of tasks. Compliance adherence like reviewing processes during optimization helps businesses ensure they are compliant with all relevant regulations and obligations. As new business processes reduce errors and increase consistency of operations and hence high-quality consistent results are realized. It also increases accountability as automated systems and optimized management practices ensure proper monitoring and reporting.

  • Denise says:

    Firstly, obtaining an accurate assessment of the issues that are negatively affecting your business is vital. Identifying the correct problem areas is the only way to rectify the issues and optimize the business moving forward. Once the areas ripe for optimization have been identified, a plan of attack needs to be developed. Here, it’s important to recognize that any action or change initiated will create reactions and implications for your business and team. Therefore it’s important to create an ongoing plan that covers both the short and long term aspects of your business and supports your team. Assessing the areas that require optimization and developing a plan of attack means nothing without implementation. This step is where most business owners and operators falter, as they don’t make the commitment to follow through with implementation, and as you know, a plan without execution is pointless.

  • Kinsella says:

    True and effective business optimization means the complete coordination between these three steps so that you can meet and surpass your business goals. Goals, which should cover the long-term, creating and delivering impactful change that is positive and consistent moving forward. However, in our experience, many owners half-heartedly have one or two attempts at implementation without much success. This is the primary reason a strong external working relationship with a business optimization partner is vital. It helps to keep you accountable, provide unbiased and objective advice and delivers the support you need to keep moving forward to a better business future.

  • Lynne says:

    Optimizing business processes and automating some operations isn’t beneficial only to giant enterprises. While they’re the ones that implement it on the largest scale, small businesses can easily improve their productivity framework as well, by taking persistent steps towards goal-oriented decision-making and amended workflow. If you start a journey without a goal, you’ll stop at the first obstacle, never moving forward. The same rule applies to every single business activity. To succeed, companies need a clear vision of where they want to ultimately. Setting clear goals eliminates the hours wasted on purposeless task implementation and helps to define important steps that lead closer to the efficient business optimization and big accomplishments.

  • Ashley says:

    Good article on the worth of optimization Vivek. No longer being content to accept lesser results than you’re entitled to for your efforts. Instead, you demand and accept nothing less than the highest and best outcome for every action you ever take and every activity you ever engage in. You do this by integrating and leveraging all your successful marketing approaches to achieve the optimum outcome and getting the greatest return for the least expenditure of time, effort, manpower and money, at the lowest possible risk to you while reducing stress, freeing you up, and providing for consistent control and total predictability.

  • Anne says:

    For me, business optimization is primarily a method to improve the mechanisms of a business to increase efficiencies, reduce costs, and increase profits. These optimization techniques ensure the best possible leverage on outsourcing, negotiation of existing contracts, and realignment of existing resources to achieve set goals and targets. Sometimes the investment in capital expenditure is required to decrease the operating expenditure of companies so that long-term benefits can be realized for all times to come. Businesses today invest millions to identify current and potential performance bottlenecks in their operations. Normally, internal or external consultants are assigned for the specific purpose of identifying such improvement opportunities. This process highlights the need for cost savings or other improvements and then applying those enhancements to the day-to-day operations of the company.

  • Sacarello says:

    Optimization, particularly in business, encompasses a broad spectrum of duties, ranging from everyday tasks to the entire work processes of an organization. Various departments, including Human Resources, Finance, Manufacturing, Information Technology, Administration, so on and so forth, all require optimization processes for smooth and efficient running. Optimization not only boosts the efficiency of various departments of an organization, but it also promotes accountability. Optimized and automated processes ensure proper reporting and monitoring, which eliminates the possibility of frauds, human error, and various other losses. Optimization outsourcing is also beneficial to boost your business. While an organization can set up an internal team of employees to work on business optimization techniques, it is always recommended that professionals, with the relevant experience, are handed the task. Outsourcing your business optimization processes enables your company to benefit from global best business practices. External companies deployed to optimize your business will have experience and knowledge of how other companies in the industry and in the region are optimizing their businesses.

  • Reed says:

    Good article Vivek Sood. Your business processes are much more than the way you manage day-to-day tasks at your company. While many of these procedures might seem mundane or unimportant, the reality is that business process optimization is crucial for your company’s lasting success and competitiveness. If your team’s hours are filled with completed tasks that could be performed automatically or correcting errors, they’ll never be able to devote time to the work that matters most. Implementing business process optimization strategies is a great way to move your company into the 21st century and gain a significant advantage over your competition.

  • Nancy says:

    At the end of the day, your ultimate goal with business and business process optimization is to improve the quality of your company’s results. Whether that entails streamlining your order fulfillment process or reducing human error in your internal reporting, an optimized solution will allow you to deliver higher-quality results to your customers by making key internal improvements. This, in turn, will help build a stronger reputation for your company, helping you retain your current client base and gain new clients. By ensuring consistent and efficient internal operations, you will be able to improve your profit margins by reducing operating costs.

  • Barbour says:

    We’re living in an age where technology helps us with literally everything. It can also help companies to optimize a significant amount of business processes, task, operations and automate parts of the everyday work. The most widely used automation software these days by almost every leading company covers task management, project planning tools, marketing and sales automation, billing software and reporting tools, such as a KPI dashboard. Before buying any tools, business owners and companies need to outline their main problems and tasks they’d like the new software to handle. The executives must seek guidance from IT experts for finding new software that helps to choose the right tools that are highly beneficial to a specific company’s work process. Depending on organizational needs and work requirements, companies are able to adopt many tools and software that facilitate tedious everyday tasks and collect data for extensive business optimization and analysis. Many large organizations implement business process optimization software to streamline their workflow and integrate various software.

  • Grob says:

    The first and most obvious benefit of business process optimization is how it can improve your company’s efficiency. Many businesses continue to rely on inefficient systems or even require manual input on tasks that could be performed automatically. This results in wasted time and resources, which minimizes your ability to maintain a profit and adds undue stress to your employees. When this happens, employee satisfaction suffers and your business processes are bogged down by avoidable errors and other problems. By automating select tasks and streamlining others, business process optimization will allow your team to operate more efficiently and dedicate more of their time to tasks that will grow your company.

  • Kevin says:

    There are many different ways in which a company can benefit from business and business process optimization strategies, which is a management approach that strives to construct new optimization strategies and develop new resources to make an organization as effective as possible. This approach encourages organizational leaders to get back to basics and get rid of processes that aren’t working and creates an environment of ongoing monitoring, analysis, and adjustments when and where necessary. Business process management consulting firms can also help ensure the most successful optimization strategies possible, which achieves the company’s vision without a high level of risk and threat.

  • Dale says:

    Well, optimization is magical. It actually secures the resources of your company and at the same time give rise to s safer workplace of a company. If you optimize your business process and management strategies today, you will have a more secure environment tomorrow, and I am not just talking about the locks on your office building. I am talking about company assets such as large sets of data. The new automated processes and optimized structures will allow your business to implement and maintain stricter internal controls to reduce any risks to these precious resources. An optimized business management plan and strategy can even make the workplace a safer place to be. Implementing safety regulations is much easier after optimizing your business processes with help from an experienced consulting firm. This applies not only to the physical safety of staff members but also to the safety of their personal information.

  • Kale says:

    Business optimization is actually the process of measuring the efficiency, productivity, and performance of a business and finding ways to improve those measures. It is considered a basic management technique that can be viewed as a loop of measurement, improvement, and measurement. An e-commerce company improves the turnaround time of order picking by reorganizing distribution centers to place items that are commonly ordered together in close proximity. A company develops procedures to improve the safety of its processes/ and reduce the risk of delays. Like, employees are trained to identify anyone who may require assistance on everyday operations. Each month the company reviews delays due to several management issues and tunes optimization procedures to avoid similar delays in the future.

  • Ziena says:

    If you want to make your business more efficient, it might be time to strip your processes right back to the basics. Business process optimization often goes hand-in-hand with digital transformation initiatives, and that’s because they both start from the same place. It’s all about documenting and analyzing your processes to find where you could benefit from a new approach and putting those insights into practice. This can seem like an intimidating prospect, particularly if you’re dealing with long-established legacy systems and processes, but the benefits are undeniable. Optimizing your processes gives you full visibility at every step, and it’s much simpler to monitor performance. You can be certain who owns each process, how it integrates with the rest of your business, and the results it’s delivering. That means you can see exactly how efficient it is, and identify potential bottlenecks and room for extra improvement.

  • Walsh says:

    Business process optimization isn’t something that happens overnight. In fact, it’s a process in itself, and smart businesses are always looking for the next opportunity to improve. But with a structured, tech-driven approach to optimization, your business could see massive improvements in productivity, profitability, and adaptability and that’s always a good thing. Optimizing your business processes gives you full visibility at every step, and it’s much simpler to monitor performance. You can be certain who owns each process, how it integrates with the rest of your business, and the results it’s delivering. That means you can see exactly how efficient it is, and identify potential bottlenecks and room for extra improvement.

  • Marcus says:

    Business process optimization is the act of taking your old business processes and optimizing them for efficiency. The general idea is to make it more efficient – the means of doing that, however, can vary a lot. Business optimization is one of the final steps for business and business process management, a methodology that advocates for constant process re-evaluation and improvement. So, to make it work, you should have already carried out. You should have already picked a process you’d like to work on. In most cases, you’d usually go for processes that are important for the company and are a profit-driver. What’s the point of business process optimization if it doesn’t have any impact?

  • Peter says:

    I articulate that in the process of business of process optimization unless you have the process mapped out, you’ll have a hard time finding potential improvements. If you don’t already a map for the process, you can do that by creating a flowchart using pen & paper, or using workflow software. Before you can start improving the business processes, you should first analyze each and every step. The analysis itself can either be super straightforward, with some glaringly obvious potential changes or a bit more difficult, if the problem is not too obvious. In the latter case, you can use some of the business process improvement tools to find the inefficiencies. So if you’ve already got all that out of the way, you should have a clearly defined & mapped out process, and a couple of ideas on how to optimize it.

  • Donna says:

    Business process optimization is a technique to help organizations improve their efficiency by improving their processes. It’s a part of business optimization process management. Optimized processes lead to optimizing business goals. Business optimization helps in eliminating redundancies, streamlining workflow, improving communication and forecasting changes. Your organization is in constant competition and threat from other companies, disruptive technologies, and changing norms. Optimizing business processes offers many benefits that can help businesses stay afloat in the tidal waves of change. Business process optimization can be the secret to navigating difficult seas. Planning is essential to make the most out of your business process optimization effort.

  • Colin says:

    Running an organization is no easy task and entrepreneurs are well aware of this fact. A lot of different processes are carried out on a daily basis and unless they are streamlined in the right manner, it could lead to wasted resources – be it time, money or manpower. Most companies never hesitate to hire the best employees with an impressive skill set or invest in infrastructure for better spacing. They even implement powerful hardware to help the workforce but is the same attention being given to business process optimization? Does a small or medium enterprise invest in workflow software as their team grows? The reality is that most companies are not aware of such an implementation and the need for Business optimization strategies to streamline their workflow. Before you understand how to implement it, it is essential to know the basics of optimization strategies and planning.

  • Lisa says:

    Business optimization is an extensive and time-consuming process but the potential gains in reduced cost, increased efficiency, improved visibility, and the delivery of business value justify the effort. Implementing the optimization strategies will maximize your ROI using optimization strategies and efforts. Processes within and across organizational boundaries are viewed with the intent of identifying any or all possible means of reducing inefficiencies, removing bottlenecks and optimizing process flow.
    It is important that each and every point in the process chain be viewed with an eye towards improvement and streamlining. Business optimization enables companies to align all of the business functions around the customer’s needs or end product. It further enables management to eliminate processes that don’t add value, as well as enhance productivity and throughput. Cost reduction, improved performance, efficient use of resources and increased visibility should be among the goals of every business.

  • Raymond says:

    When you undertake a strategic optimization management process, it will result in the organization saying no to some of the opportunities that may be available. This inability to choose all of the opportunities presented to an organization is sometimes frustrating. In addition, some organizations develop a strategic optimization management process that becomes excessively formal. Optimization processes that become this established lack of innovation and creativity and can stifle the ability of the organization to develop creative strategies. In this scenario, the strategic optimization management process has become the very tool that now inhibits the organization’s ability to change and adapt. An organization that is well aligned with its optimization strategy has addressed its structure, board, staffing, and performance and reward systems. This alignment ensures that the whole organization is pulling in the right direction, but can inhibit the organization’s adaptability.

  • Fanny says:

    Excellent piece of writing. Like any process, tool or strategy, there are both advantages and disadvantages to a strategic optimization management process. Unfortunately, many of the disadvantages are because of the inappropriate application, often by poor consultants, as opposed to inherent limitations. As with any tool or process, you as the client have the final responsibility to ensure that the strategic optimization management process you are using is appropriate for your needs. While I believe that strategic management in some form can be beneficially applied to most organizations, it is you – the client – who is ultimately responsible for its use or lack thereof.

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