Any successful business has built-in safeguards so no piece of the operation works completely in isolation. Every process needs a defined system. If you have an accounting system that is so complicated that only your bookkeeper knows how to issue invoices, or an inventory control system that is a mystery to everyone except the warehouse manager, your business is at risk. Every aspect of your operation needs to be structured and documented so the results are predictable and the knowledge needed to execute is captured, clear, and transferrable. Systems should be created to provide repeatable results; rinse and repeat is the key.
How do you create and implement a system? No matter what the operation, the steps are the same:
1. Specify the system. Determine the result you want to achieve, and label the process. Why do you need this particular system? Start with the word “To”; for example, “To ensure timely delivery and payment of invoices” or “To eliminate stocking errors.” The idea is to write a concise description of the objective or need for this particular system, and then give it a name or a procedure number; something to clearly identify it.
2. Diagram the system and create clearly defined benchmarks. Provide a step-by-step process for the system, with a milestone or result at the end of each step. A simple box-and-arrow design will help you map the system in a graphical way; each box is a step or action, and a result needs to be defined for each action. Restate the work objective and communicate that work has to be completed or an action taken. For example, “Invoices need to be printed and mailed.”
3. Assign accountability. Each step in the system needs to be part of a specific job function or role. Assign the accountability to a position, not an individual, so the system is transferrable as personnel change. For example, “Bookkeeper to enter invoices into QuickBooks.”
4. Identify timing and resources. Knowing when a milestone needs to be reached or a step performed is part of the success of the program. You need to set a timeframe for each step, and for the process as a whole. For example, “Invoices need to be issued within five days of the close of the month.” In addition, allocate the resources required for each step – facilities, equipment, staff, supplies, information; anything essential to do the job. Not all systems will require a list of resources, but take inventory to be sure the necessary tools are available to complete the task.
5. Define how you measure the system or quantify results. How do you know if you are getting the results you want from the system? Create metrics that are meaningful to the outcome of the process, such as average days of ageing, and document the results to see if the system is performing properly.
6. Establish standards for performance. Once you determine how to measure results, you want to set standards to maintain a minimum level of performance. The best metrics to use are quantity, quality, and behavior. For example, “invoices completed, logged, and sent on time, without errors.”
7. Document the system. Once you have created your system, have them available in a procedure binder so others can repeat the process. Your internal systems are your intellectual property and make your business a more valuable asset.
Proven, repeatable systems are the key to your company’s success. If you can create standardized ways of doing business with predictable results, then you can focus on more creative endeavors that will help your business grow. Apply a principle of “rinse and repeat” so you can refine the process and the results.