Make Your Business More Valuable

Laboratories typically originate in one of two ways. In the first, the owner’s parents started the business and the next generation eventually took over leadership of the laboratory. In the second scenario, the current owner(s) started their career at another laboratory, then struck out to open their own business. In either scenario, the business is managed and controlled from the top down, with decision-making and technical knowledge held by a chosen few. Obviously, this business model has been successful, as there are quite a few laboratories that continue to be financially successful in this way. However, both strategies also demonstrate a weakness in that the true value of the business is held by only one or two people. To ensure the value of your business, a well-developed process management system would have you train your employees to be decision-makers, rather than insisting that they come to you for a ruling. Spreading knowledge and authority provides stability and sustainability to a business.

All processes have the potential for defects. Therefore, all processes also offer an opportunity for the elimination of defects, which can drive quality improvement. Whether engineering a crown or offering clients a new service—completing a task correctly, the first time, is critical. Many laboratories do a great job at correcting errors, but successful businesses do an even better job at preventing errors. Preventing errors involves putting systems in place that prevent errors from happening in the first place. This ensures that resources spent on correcting the error can be used for producing more products in a timely manner. Root-cause analysis is a tool that helps to make sure that a problem, once isolated, is never repeated. This is accomplished by using a team approach to break the problem into small pieces. Once a problem is broken down, a permanent fix can be designed and implemented, thus elminating the problem for good.

Employers typically refer to on-the-job training as the most common method of educating both new and experienced employees. However, formal education or training outside the workplace is required to ensure the perpetuation of standardized work methods, to make retraining easier to conduct, and to support a standard level of quality. This also ensures that “tribal knowledge” (the individual skill of a particular employee) is documented and shared so all may learn.

Many businesses track and measure production activity at the “business” level. However, those measurements do not properly translate to an understanding at the “working” level. Conventional industry financial measures—such as revenue and expenses—are evident, but the employee on the floor won’t often link his/her behavior, actions, or thinking to those measures. This disconnect can be a major barrier to the business meeting financial objectives. Laboratories should define a proper set of measurements to evaluate performance at all levels of the business. Properly chosen, those few measures will guide the performance of the employees and deliver the top-level results. Make sure measurements are meaningful to the staff, and that they reflect the performance of the process, not necessarily the individual. Measurements that provide guidance to the typical laboratory include: total revenue (weekly/monthly); expenses (monthly); daily incoming & outgoing units (weekly); warrantee costs (monthly); accounts receivable (monthly); remake dollars (weekly); and technician operating effectiveness (weekly).

Turning focus toward reducing the movement of employees and product in the laboratory can increase productivity. The product mix has changed in recent years and many laboratories have added new equipment and production processes as space or infrastructure permit with little consideration for the flow of work. If poorly constructed, a laboratory’s layout can cause considerable issues within the overall workflow, adding unnecessary time to processes and lowering revenues. It is advised that laboratories start with a clean sheet paper, create the ideal workflow, balance that against the cost of achieving that layout, and end with a compromise that will improve overall workflow without causing financial hardship. Actions to be considered include removing unused equipment from prime workspace, combining sequential steps onto one workspace, removing non-structural walls, and improving the use of dust collection equipment.

Making your laboratory more valuable requires two types of action—leadership engagement and employee involvement. You will note that the author stresses engagement, which requires that leadership take an active role in driving changes and improvements. Your workforce will see the leadership “walking the talk” and act accordingly. Employee involvement requires participation in and ownership of the changes. Once the employees make the process or task their own, sustainability is virtually assured.

Bob Yenkner is the owner of Practical Process Improvement (PPI) in Higganum, CT.