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This is Part 3 of my 10-part series on the 10 core business processes. I’m going to cover number three which is quality, process improvement and change management. If you recall, number one was customer strategy and relationships or otherwise known as marketing. Number two was employee development and satisfaction, and now we're getting to number three: quality; process improvement; and change management.

You may be asking what do I mean by quality, process improvement, and change management and how does it apply to my business? Well, first and foremost, quality in the context of corporate supply chain work is the ability of a product or service to meet demand or spec above and beyond average. Can it be consistently delivered above and beyond average? If an average failure rate for a specific item is five out of every 100, and your product fails only one in 100, you would have a quality product. And typically, when you start talking about quality, you look at how well designed it is. How well does it perform? How long does it last? What was the ability for it to meet or exceed the recommended need? It doesn't really matter whether it's a product or a service. For example, you can have a quality presentation, a quality report, a quality employee, a quality widget (a manufactured piece of equipment) or a quality implementation. As a small business owner, you should strive for quality in everything that you do because that's going to be one of your primary differentiators.

Process improvement is your desire to continually improve, to get better, to find a way to deliver something that has more capabilities, more form, more functionality. You're able to make something or provide a service at a lower cost than you were previously as a result of something that you changed -- some new something that you implemented which potentially eliminated a step or potentially eliminated a handoff, or something that allowed it to improve upon what you were doing previously.

One of the things that we see, especially if you have a cell phone, is that mobile phones are becoming more and more capable - and in some cases for the same or even less cost than what we paid for a phone five years ago, 10 years ago, relative to what they do. It's just amazing. There was a whole host of innovation and process improvement utilized to do that. In some cases, some of the phones are more expensive, but they call those flagship phones and they do even more, but your plain jane basic phone you can get for next to nothing. Another good one is those thumb drives that you plug into your computer. If you remember when they first came out, they were asking two and 300 bucks for the big ones. And now you can go into the store and get the really big ones -- one gigabyte, two gigabytes, five gigabytes -- for $15 or $18 US, and that's a huge example of a process improvement. What happened that enabled these products to offer more storage for even less money than when they started out?

We all go through change management. If you have a streaming service, you're going through change management. You had to learn how to get your television capable of supporting streaming. If your TV isn't capable of streaming, then you had to figure out how to cast the screen of your laptop or your phone to your TV. And so you learned how to change. You learned what you needed to do to implement that. Getting a laptop or getting a desktop computer is change management. Getting a new car is change management -- just figuring out where the radio is and how to operate the knobs and antilock brakes and all those other kinds of things.

So we as humans deal with change management on a regular basis and in this case as a core business process. You have to make sure that there is something that differentiates the way that you offer your product, and that your customer gets sustained value from it. Very few businesses out there can sell the exact same thing the way they originally sold it, the day they first opened. They are very few. There are some, and even in their case, everything that they wrap around that product, they've had to change with automation and back-office systems and complex invoicing requirements evolving over time.

They aren't just writing down on a little sheet of paper, “Hey, here's your invoice” and going from there. Even that doesn't work that way anymore. So, you will be confronted with making sure that you're keeping up with all the changes in your customer's organization and you'll have to have process improvement in order to have those changes flow through your company. Change management is as much about how you go about implementing change in your company as it is when you come up with an innovation. How do you actually work with the customer to affect that change within their organization? How do you talk about it? How do you describe the value of it? How do you describe the changes that are going to happen in their organization that make what you're offering them worthwhile and exciting?

I think you can now see how quality, process improvement, and change management are significant to your company, and you can also see that it has an impact on the product and service that you're offering to a customer.

What does your having this core business process tell a large company about you? It's yet another item that says you're ready to do business with them.  You have a defined quality, process improvement, and change management process. If you're smart, this is in your procedures manual so you have it documented. And one of the big things, especially within your quality process, is your ability to do root cause analysis. You want to have an error free system if you can possibly have one. It's a great goal, but it's unrealistic. The thing that you must have in place is a process that allows you to figure out where in your procedures something went wrong.

I can't tell you how many times my company and the companies that I work with were saved when someone made a mistake and we were able to go through and pinpoint exactly which procedure was an issue because we had the procedures written down. Then we were able to decide whether or not we needed to modify that procedure for the given situation, or if there was additional coaching or training required for the employee in order to make sure that that didn't happen again. That was great on our end because that meant we didn't spend a lot of unnecessary time trying to reengineer the whole thing. We were able to precisely figure out what happened, where the breakdown was, and what the root cause was. But more importantly, within less than 24 hours, sometimes the same day, we were able to respond to the customer that we have identified the issue and here's the corrective action that we have put in place. That gave the customer confidence that they were working with a competent supplier, and because that kind of control, that kind of rigor was in place, we were able to actually go after a bigger book of business where the customer decided they were going to transition an entire book of work to us to manage.

Once again, you don’t have to have it to make money but you're going to make a lot more money with it. Yes, there will be an investment to do this, but you're going to find that one of the best things you can do, especially to save you some headaches and give you peace of mind, is have documented processes and procedures in place. Then when you hire people, they know what they are supposed to do or what they're accountable for doing, so when something happens, first you can go to the procedures manual and see where a breakdown occurred. Second, you will know who was accountable and responsible for it. And then third, you can now start running the business with what I call management by exception -- meaning that you have a good expectation that the procedure manual is being followed. Everything's working fine.

Then if something does happen, and people are doing everything right, it's something that you haven't come across yet in the business. That's exactly what you want your measurement and your metrics to tell you. If everything's working fine, then you can go off and do higher value things, but if you get an alert that something's wrong, then it's “well, what happened”? Did we follow procedure? If so, then this is something new and you can modify the procedure to adjust for it.

I'll give you a perfect example of this. When I was a buyer, one of the worst things for me was to have people who could not submit a quality invoice. Every single invoice they sent was just wrong. It didn't matter whether it was monthly, daily, weekly, quarterly -- every time we got one it was wrong. How could that be? How could someone keep sending wrong invoices? That's just a core thing in business. As a business owner, if you don't get anything else right, at least be able to generate a correct quality invoice that meets the customer's demands, because if you can't get that right, that speaks volumes about you as a business owner and your business in general. Think about this for a second. If all of a sudden you start getting invoices kicked back and they've been running for a while, then you might ask “well, why are we getting invoices kicked back”?

And you discover that somehow or another there was a breakdown in your procedure when your customer added a requirement that you had to put another piece of information on the invoice. The point being -- rather than your invoices sitting there forever and not getting paid because the customer's requirements changed as to what they needed on the invoice -- an alert telling you that one of your invoices didn't get paid would greatly improve the time it took to get them paid. You would be amazed at how often people don't have that alert. Imagine how much time you would spend if every single invoice you sent in got kicked back because it was just never correct. It never had the project number, the business unit, or the person who requisitioned the service. It didn't line up with the PO number nor the line number on the purchase order. In order to prevent this problem, you can dedicate someone to invoicing or you can put a good quality process improvement and change management process in place specifically for invoicing. You'll invest a little bit of time upfront, but it will save you a whole host of time as you continue to work with a particular customer and a particular client.

So, there you have it. Process number three of the 10 Core Business Practices -- Quality, Process Improvement, and Change Management – is a vital one of your 10 core business processes in order for you to successfully do business with the big boys. Having this as a core part of your business tells a customer that you're ready to play.

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