This article focuses on why Business Discipline is Important & How to Implement Business Discipline.
It is said that "Discipline is the ability to do what is important before it becomes urgent" Let me share a small example of how this is true.
One manufacturing company, which produces rolled steel products ran out of stock of commonly used bearings. The requisite quality bearings were not available in the local market and had to be sourced from other nearby locations. As a result, the production was stalled for almost 12 hours! Although the cost of bearings was minor, the loss caused due to production halt was huge.
How could this situation have been prevented? This situation could have been prevented if the company had clearly defined business disciplines for inventory control mechanisms and defined re-order limits, as well as what to purchase, when to purchase, and from whom to purchase. They could have avoided the loss of time, productivity, and money.
Why is Discipline Important for a Business? Why Implement Business Discipline?
An organization that sets up business discipline by defining clear guidelines, processes, and standards for Production, Inventory, Sales, Procurement, Finance, Quality will be able to achieve consistent results, identify & eliminate problem areas, make optimum utilization of resources, improve efficiency & profitability of the company.
How to implement Business Discipline with ERP?
ERP Software serves as a facilitator for establishing and rolling out business discipline in an organization. With the help of ERP it is practically possible to define and implement business flow, to define rules & guidelines as well as implement validations and checklists for almost every activity in the manufacturing organization. You can also implement approval workflow, and set up notification & alerts to be sent when there is a deviation from the defined business flow or guidelines.
You can set up Key Performance Indicators(KPIs) to define and monitor success criteria for each function. With the help of detailed analysis reports you can determine if the process is functioning optimally or there are shortcomings and accordingly devise an action plan on how to overcome them.
When Business Discipline is implemented and rolled out using an ERP, managers can perform day to day checks to ensure if the disciplines are being followed or not. Senior Management can also check the impact of their strategies implemented using various business disciplines, to understand whether there is any improvement in business or not. This becomes the basis for making informed decisions for carrying out continuous improvement.
We observe that companies that have implemented business discipline and follow them religiously have been able to achieve:
To read more specific examples of how to implement business discipline in areas such as Inventory, Procurement, Maintenance, Production, Finance, Sales and more, read our Blog: Business Discipline: How to implement business discipline with ERP?
This article is an excerpt from the Blog on the Force Intellect website.
