How to Do a SWOT Analysis: Template & Tips

Dear CFO,
My company is embarking on its first ever strategic analysis and planning session and I’ve been asked to help the team start with a “SWOT analysis.” I am not sure how to do a SWOT analysis or where to begin.
Needing a first step in Amarillo

A first-time strategic analysis and planning process can be intimidating. It’s hard to start with a blank sheet of paper to stimulate meaningful outcomes. But, as with many business planning processes, there are tricks of the trade to help you get off to a productive start. One of the best strategic analysis tools is a SWOT analysis.

As you probably know, SWOT stands for Strength, Weaknesses, Opportunities, and Threats. Learning how to do a SWOT analysis isn’t challenging, but this simple guide is a powerful tool for visioning and strategic planning. Engaging multi-functional teams in defining the various elements of a SWOT analysis eliminates the risk of getting too focused on the perspective of a single person (the boss). Enlisting the help of your full team provides a more well-rounded view including the issues faced in the day-to-day operations of the company.

How to Do a SWOT Analysis from Scratch

To get started with the SWOT analysis, there are several approaches. Often, a company will start by performing a SWOT analysis on a competitor as a frame of reference and to get thoughts flowing. It’s usually easier to identify the weaknesses and challenges of your competitors and often they will be congruent to your own company’s challenges.

SWOT analysis is a team effort - everyone should be involved to help target all aspects of the business
via Pxhere

Similarly, as you’re planning how to do a SWOT analysis, consider internal framing of your perspective for strengths and weaknesses and using an outside perspective when thinking of opportunities and threats. Remember that the SWOT analysis paints the picture of where you are today. Using the strategic analysis and plan, you will then decide how to better move toward your goals and company targets. Directly address opportunities and threats within the strategic plan as it is developed. Then plan for the future by strategically pursuing opportunities that fit your goals and troubleshoot relevant threats.

Your Company culture determines the best method to develop the SWOT, whether you use four quadrants on a whiteboard, mind mapping, specific software, or flip charts. The SWOT development method isn’t as important as the content that comes from the activity. However, I recommend no matter what method you take to develop your SWOT, you approach it as a group activity, as the outcome will be more complete and you’ll create a more accurate assessment. Document the SWOT analysis both for reference and for comparison as you move forward with strategic planning.

Using Questions to Develop Your SWOT Analysis

As you’re deciding how to do a SWOT analysis, it’s helpful to develop a set of questions to guide you through each quadrant. You’ll find a set of SWOT template questions below to help as you go through the SWOT analysis exercise.

Notice that in posing the questions, they are often the mirror image of another element of the SWOT analysis. So, don’t be too concerned if a question is in the “wrong” category for your company. A question of Opportunity can be evaluated in the context of a Strength or a Threat, and a Threat may expose a Weakness or convert to an Opportunity. Each quadrant is related and intertwined.

As you might guess, these SWOT template questions aren’t comprehensive. You may wish to amend them to align with issues unique to your own business. As you decide on which questions apply, think in terms of your products, employees, customers, competitors, economy, and more specific questions will come to mind.

SWOT Template: Strengths

The first step in your SWOT analysis is identifying the strengths
via Pxhere

Examine your company’s strengths, both internally and externally. Consider your company against your own benchmarks and the market competition.

    • Does your company’s value proposition compete favorably in the market?
    • What distinguishes your product from that of the competition?
    • Are your systems up-to-date with timely and accurate information for decision-making?
    • Are your distribution channels loyal and functioning well?
    • Does your product reflect an experience for Millennial buyers?
    • Do you have a clear pipeline of new products or services?
    • Are you the market leader in any emerging markets (ex. serving the cannabis market)?
    • Do you provide a highly specialized product?
    • Do you hold patents over other intellectual property?
    • Can you get the job done faster or cheaper than a competitor?
    • Is your customer experience better because frontline employees love their jobs?
    • Can your business grow with your existing infrastructure?
    • Are there high barriers to entry in your business?


SWOT Template: Weaknesses

Identifying weaknesses during a SWOT analysis helps you better prepare for improvement
via Pxhere

Don’t be myopic when analyzing weaknesses. Take a clear step back and examine your competitors’ strengths. Look at others within your industry to expose your own challenges.

    • Do you know why your company loses sales?
    • How strong is your brand within the market?
    • How are your lead times compared to the lead times of your competitors?
    • Are your employees provided market pay, benefits, and other perks they value?
    • What complaints do you hear from customers, distributors, or employees? Do you address the concerns and what are they telling you?
    • Do your products represent a substantial enough compensation for your distributors or are you too small a fish in too big a pond?
    • Do you have a high employee turnover?
    • Do you have adequate policies and procedures to assure tribal knowledge stays within the company?
    • Do you have a clear method for facilitating the training and evaluation of employees? Do you have adequate cross-training and bench strength?
    • Do you know your product development and life cycle, especially compared to your competitors?
    • Does your company culture support changes, if they are needed?


SWOT Template: Opportunities

As a team, identify the opportunities your business has to grow and improve during the SWOT analysis
via Pxhere

As with strengths and weaknesses, opportunities exposed are considered in the context of the strategic plan (long-term and short-term).

    • Are new markets opening up that your product can address (solar energy, hydroponics, virtual reality, etc.)?
    • Have you created technology that positions your product ahead of the competition?
    • Can you accelerate your development cycle?
    • Can you capitalize on alternate marketing channels (social media, strategic alliances etc.)?
    • Can you tweak your product to meet an alternate demographic need?
    • Have you scoured your intellectual property to find new applications?
    • Can you fill a hole in your product line, distribution channel or geographic reach with an acquisition?
    • How will your customer base change over the next 3 to 5 years? Taylor Swift changed to keep her customer base, will you adapt to the new to keep yours?


SWOT Template: Threats

During the SWOT analysis, threats are the last to be identified but they're some of the most important factors
via Pxhere

Don’t forget that unaddressed weaknesses can turn into threats. Think broadly – competitors, general economy, regulations, tariffs, global reach, and product evolution.

    • Is someone eating away at your market share?
    • Are you the high cost/high service producer in a market that is moving toward price competition?
    • Are substitute products entering the market (such as what was seen in the craft brewing industry)?
    • Are you limited to servicing a specific geography (such as in the case of a franchise)?
    • Do you lead or lag in a changing economy and how does that bode for you today?
    • Did you anticipate growth and spend yourself into financial difficulty?
    • Have you addressed eroding market share?
    • Is your industry changing (such as: production moving overseas, alternate products, consolidating for economies of scale, etc.)?
    • Have you evaluated your competition in all of your markets?
    • Are competitors capitalizing on new marketing and distribution channels?
    • Are there regulations or tariffs on the horizon that could negatively affect your business or that of your customer base?
    • Are you dependent on a customer or market facing disruption?
    • Are regulations increasing overhead and threatening profitability (community banks)?
    • Are competitors entering new geographies, consolidating vertical markets or making other changes?

For each section of your SWOT analysis, rank the top five Strengths, Weaknesses, Opportunities, and Threats you’ve identified during your brainstorming session. The criteria for ranking should be the highest value at this point in time (rather than anticipated threats in the future, or past weaknesses now being addressed).

Once you’ve ranked each quadrant of your SWOT analysis, determine how to capitalize on Strengths and Opportunities. How will you move forward productively to make gains? Then address Weaknesses and Threats as you build the strategic plan. Go slow and deliberately address each item. There is no need aim for completion of every item in your plan this year. You may wish to view your plan as 1, 3 and 5-year benchmarks. In the end, the company proceeds with the elements of the SWOT analysis within the context of the vision, mission, and strategic plan.

The SWOT analysis is a great business exercise to highlight areas of importance and keep them on the radar for planning. It’s a simple tool, but one that will really paint the full picture for you and your company. Best of luck on your SWOT analysis! I’m sure it will give you a 360-degree view of where your business is headed.

Featured image via Pxhere. All images licensed for use via Pxhere licensing.

CFO Starters: How to Set Up a KPI Dashboard

Wondering how to organize those key performance indicators? A KPI dashboard is an essential way to organize the data in one spot. Here’s how to set up a KPI dashboard.
Dear CFO,
My boss recently came back from a seminar and was excitedly going on about setting up a KPIs and dashboards. Is this a new flavor of the day or are the KPIs and dashboards valuable tools for running the company? It seems it’s my job to start the process of collecting and presenting the key performance data.
Wanting to Make a Meaningful Contribution in Kansas City

I can relate to the “flavor of the day” business conundrum, but KPIs aren’t one of them. The term KPI (Key Performance Indicator) has been around for quite a while. One article described KPI as a term that “some brainiac coined … to help identify details that matter for businesses.” Details THAT matter vary BY business, of course, but there are commonalities. Often, the financial area is an effective starting point for developing KPIs and tracking them within the KPI dashboard, primarily because the financial systems already have a lot of numbers available and benchmarks to compare them.

In fact, whether or not you actually call them KPIs, the numbers you track every day, month, or year are likely KPIs. For example, comparing today’s sales from your POS (point of sale system) to yesterday’s is a KPI. Analyzing the financial statement margins by region compared to your budget, industry, and prior year are the top level of KPI analysis.

KPI Works from the Bottom Up

A KPI dashboard is a great way to track goals, progress, and even where to improve your processes
Image via Pxhere

Rather than identifying a problem at the top level, design your key performance indicators and KPI dashboards to identify the results and issues from the bottom up. Rather than using sales by product line to identify product mix differences within the region, and then further “drilling down” to look at the performance of individuals, a sales dashboard should identify the individual performance, product mix, or another KPI driving the variance. The department head is then responsible for flagging and explaining variances, as well as addressing the plan to meet benchmarks or goals.

KPIs should drive decisions and lead to action. Obviously, the financial department would have limited reach in the above example situation. Senior management must lead, as well as hold all team members accountable.

Common attributes of a good KPI include:

  • Well-defined, measurable information that is readily available or cost-effectively obtained.
  • Measuring a factor that has a direct impact on a specific goal or long-term performance.
  • Effective communication of the performance standards throughout the company, cascaded to responsible departments.
  • Actionable results. You should be able to act on it, holding team members accountable when the indicator digresses from the goal.

Where to Start with Key Performance Indicators

The financial area of your business is often the moderator of the “readily available or cost-effectively obtained” indicator. Frequently, there is so much enthusiasm for the implementation of KPIs that there are too many measures. As a result, it becomes too time-consuming to collect the data and everyone quickly loses interest.

I suggest starting with a few readily available metrics in each department:

  1. Identify 1-3 key performance indicators meaningful to the performance for each level of the company. Don’t overdo it with the number of indicators you take on at once. For company goals, cascade down; for operating objectives (benchmarks), work from the bottom up. Collections and Accounts Receivable may measure accounts over 90 days against a benchmark (less than 5% of total receivables) or a goal (reducing aging of over 90-day accounts to less than 5% of total receivables – thereby expecting a downward trend). Sales might measure against a goal (5 new customers each month or increasing average ticket to $500 or increase close rate to 50%). Check out this smorgasbord of KPI choices to help you get started – don’t pick too many!
  2. Determine the best time frame for setting and evaluating goals/benchmarks. Are you seasonal and therefore monthly goals vary significantly? Can you set an annual goal and expect to capture 1/12 of the goal each month? Do you expect it to take 6 months to reduce the 90-day receivables or is the goal to reduce by the end of the year?
  3. Determine the data elements needed to get the data for your KPI dashboard. For example, does the accounting system age accounts receivable? Is the average dollar value of the ticket available (or the elements needed – the number of tickets and sales dollars)? Is there a sales funnel that measures conversion to sales?
  4. If the data elements aren’t readily available, identify what needs to happen to get the needed data and whether are you able to capture and use it cost-effectively.
    • Review the existing systems within your organization to determine where to potentially capture the data. For example, to measure pipeline, you need to know outstanding quotes. Do you track quotes? If you track quotes, do you “close” them when it becomes evident you aren’t getting the business? Do quotes over x days still belong in the pipeline? Does your system track history to identify how many quotes convert to actual business?
    • The key to readily available data is taking full advantage of proper set up of your systems. What are the capabilities of your systems? CRM systems usually measure the sales funnel (calls to quotes to order). Basic accounting systems often have industry specific processing that can collect data (QuickBooks allows for the classification of quotes – won/lost, etc.)
    • Beware of GIGO (garbage in/garbage out). With any system, there are ways to scam or carelessly enter data. Optimizing the systems to capture data as it occurs increases the likelihood of complete and accurate data. For example, if all sales calls are required to go through the system, quotes prepared in the system, quotes converted to orders, and orders invoiced, there is little room for finagling. The process itself encourages accuracy.
  5. Everyone in the company must understand their role in the KPI implementation and why it’s important. Everyone means everyone: CEO, department head, and support personnel. Senior management must lead and enforce accountability as well as monitor response to variances from benchmarks or goals through a well-defined reporting structure.
  6. Verify the accuracy of the metrics on a periodic basis, as well as the reporting and actions. Incorporate this process into the monthly financial statement close and manager’s meetings at the direction of the CEO.

Establishing a KPI Dashboard to Manage the Information  

A KPI dashboard should be implemented and useful at all levels of your business - from the CEO to assistants and managers
Image via Pxhere

A KPI dashboard visually represents the performance of KPIs against benchmarks or goals. The most detailed KPI dashboard is at the lowest level of the company and the KPIs and related progress are consolidated as they move higher in the organization.

  1. Determine the parameters used to judge the performance against a goal. If you are 10% below your goal, should you take corrective action or just investigate? Should your company be 75% of the way to the target on September 30th or is your business seasonal (like retail) and only expected to be at 20% of the goal? The choice of percent vs. dollars isn’t critical to the success of the KPI dashboard, but rather that the KPIs are clear. Each person in the company should have the capacity and resources to reach their benchmarks.
  2. Determine a visual representation of the KPI at each level of the organization.
    • Department level – In the sales department, you may choose racehorses staggered with the “closest to goal” salesperson in the lead (whether the salesperson is closest to achieving the percent of the goal or the actual dollars). The achievement of the accounts receivable aging goal (reduce 90-day accounts to < 5% of total receivables) might show a trend line in green if it’s heading in the right direction or simply highlight the percent in red if going the wrong direction.
    • Senior management – The KPI dashboard may only show year-to-date sales with a color (red, yellow/amber, green) to show the progress. This KPI dashboard may not even reflect a report on the accounts receivable unless the A/R was off track or had a significant impact on cash flow. Consolidate data as you move up the hierarchy.
    • Some departments in your company may need more fun and competition to motivate them. Others may find success by staying focused on day-to-day performance. Keep the company culture and culture of the individual departments in mind as you plan your KPI dashboards.

Once a year, as part of your planning process, evaluate the efficacy and importance of the KPIs you’ve selected as your measurements. You may find the need to change them, add new indicators, and eliminate those that no longer add value. System improvements for data collection and evaluation can become part of the next year’s KPIs and should be added to your KPI dashboard to give you a constant snapshot of your company.

If the list of potential KPIs or keeping track of the data via a KPI dashboard still seems overwhelming, you’re welcome to contact me for a free 2-hour consultation.

Featured image and all post images licensed for use via Pxhere.

How to Make Inventory Easier on Your Business

Inventory day is a big day for any business. Make inventory easier with these tips on how to better organize and manage the inventory process

Dear CFO,

As the controller in a very small manufacturing company, taking inventory is the worst job in the world (ok, maybe not the worst, but certainly tedious). The process itself is hard, but the reconciliations are even more difficult. My team uses information provided by the shop floor and sometimes I’m not sure if they really counted. What can I do to make inventory easier?

Inventory Not Managed in New England

You aren’t alone in your frustrations. New ERP (enterprise resource planning) systems can make inventory easier with real-time tracking. But keep in mind, these ERP systems are still dependent on good information. You know the old saying – garbage in/garbage out?

During inventory, many of the inputs are usually completed on the floor and not under your direct control, presenting another problem. Senior management must be involved in improving the inventory process. This takes us back to a discussion of policies and procedures. When there are clear policies and procedures with assigned responsibility, there are fewer errors and much less finger pointing.

How to Make Inventory Easier

Recording inventory is a time sensitive project so make sure your whole team is on board and following inventory procedures to make inventory easier
Photo by SparkFun Electronics

At the heart of it, an effective inventory process comes down to effective management. The discussion points below may seem so obvious and rudimentary that you can’t imagine they create problems, but you’d be surprised. So, let’s go through the tasks and resources included in a successful inventory procedure.

Timely and Accurate Recording in the Inventory System

  • Implement a policy stating who can order inventory and how much inventory they can order at a time. The policy should cover the types of materials and the dollar amount each team member has the authority to use when they purchase. If larger amounts of materials, inventory, or supplies are needed, who is responsible for the escalation? Sophisticated systems control spending policies with set dollar limits based on login authority.
  • Record part numbers for all inventoried items, typically called the Item Master. There should be a policy covering who can set up the numbers on new parts in the system, along with the numbering method and a procedure to record it consistently. Properly identify all the characteristics for each part in the inventory system. Characteristics in inventory systems include:
    • costing for purchase and pricing for sale,
    • units of measure for purchase and use/sale,
    • accounts for transactions,
    • descriptions for purchase and sale,
    • various other information related to vendors, serial numbers, bills of material etc.
  • Place purchase orders through the control system. This assures the recording of inventory orders happens under proper authority. Management can easily see open orders that might influence production or cash flow planning. (This is different than costing methods, which is another discussion.)
  • Receive inventory by recording through the system and against purchase orders, simultaneously implementing procedures to resolve short shipments or other issues. This enables accounts payable to process quickly knowing there is authority to pay for the amount ordered and at the price indicated. Make sure all inventory received prior to month end (or inventory date, if different) has the appropriate invoices processed.
  • Use a bill of materials. If your company makes a product repetitively, whether it’s an assembly, manufactured, or you’re running a construction company, identifying the parts used to make it and recording the bill of materials will automatically relieve inventory. In sophisticated systems, the recording is done as the part is processed. In other systems, a manual input may be required to “complete” the recording. Inventory procedures make clear who, what, where, and when to assure consistency.
  • Record all shipments of finished product through the system along with the related billing.

Physical Space Needed for Inventory

Having the proper storage space for your inventory is one way to make inventory easier for all involved
Photo by Pxhere
  • Control high-value items in a secure place to avoid tempting employees to “walk” off with them. For example, when copper is expensive, the copper wire should be locked in a cage. Not all team members should have access to all inventory.
  • Place high-volume items in an easy to reach space, neatly organized. Clearly label inventory locations. Clearly label all parts. This might require a number, description, or barcode. This inventory organization may also require bins, shelves, buckets, and other receptacles. Neatly organize lower volume and bulky items as well. Limit access to the inventory but ensure if someone is looking for a part, they’re able to find the RIGHT part.
  • If using a Kanban or other inventory staging type of process, allocate adequate space for the inventory staging. A corollary is to limit the amount of inventory movement. (I once had a client who lost a full order during production because someone didn’t put it in the right spot. Several months later, they found it.) Over-capacity is also an issue.
  • Segregate obsolete inventory and overstock inventory. Record your obsolete inventory and preferably sell it off. As an auditor, I once identified that based on current usage the client had 300+ years of a certain part. Don’t make this same inventory mistake! If you have consigned inventory, it should also be segregated.
  • Keep the workspace and production areas clear (I realize this is often a more involved process and there is a need to address the various means of getting inventory to where it is needed). Cell manufacturing looks different from production lines and assembly lines.
  • Use min/max capabilities of the inventory system to avoid keeping too much inventory on hand – an expensive proposition.

Implement Proper Cut-Off and Inventory Procedures

  • Pay attention to work in progress. If you have product that doesn’t complete in the measured timeframe, you must identify how much of the process is complete and properly attribute raw materials not yet relieved from inventory.
  • Measure all processes at the same point. Inventory received has an invoice recorded. Manufactured parts bills of material are processed. Shipments bill in the same timeframe as they are shipped.
  • Develop specific inventory procedures for your organization. This sample inventory procedure uses a pre-printed inventory sheet system and may be more complex than your company requires. Often pre-numbered inventory control tags are used.

Make Inventory Easier by Avoiding Garbage In/Garbage Out

Avoid a complicate inventory day with some simple procedures to help make inventory easier on your business and your team
Photo by SparkFun Electronics

If the policies and procedures defined above aren’t followed, taking the physical inventory, identifying and quantifying the differences becomes extremely time-consuming. That’s not to mention the possibility of generating larger book/physical adjustments. Common inventory problems include:

  • Items ordered in different units of measure than used and a system that doesn’t properly reflect the difference. For example, batteries are purchased by the box containing 4 and used individually. So, receiving 1 box isn’t the same as using 1 battery. Most systems will automatically record the conversion if the item master is set up correctly.
  • Variances in inventoried amounts. In less automated systems or where inventory is taken to a job site and the team members report the usage, it’s imperative that the released amount is compared to the used amount. Management must investigate significant variances, as well as make sure the inventory usage is recorded in the same period as it is actually used.
  • Shrink and theft due to poor oversight. Losses are inevitable without physical control of appealing (high-value, readily marketable, or useable) inventory that can “walk” away.
  • Poor inventory setup. Inventory setup is critical to maintaining the proper dollar account balance associated with the items in the physical inventory list. Make sure the pricing of the physical items is done using the same methodology of the general ledger account. If your dollars move in on a FIFO basis and the inventory list prices at average cost, there will be differences.
  • Inventory system settings that are changed too easily. The ease with which smaller accounting systems are changed is a double-edged sword. Setting security settings (somewhat limited in smaller systems) and turning on the audit trail will make it easier to trace who and when a number is changed.
  • Employee burnout. Physical inventories are tedious for everyone involved and as a result, may meet with resentment. Make inventory easier for everyone. Consider using a cycle counting process to count high value or high-volume items more frequently and lower value/volume less frequently. This does depend on systems in place that assure the completeness and accuracy of the inventory accounting. A cycle counting process is a win/win for all involved: if the activity is recorded timely and accurately, there is less work with the physical inventory.

While I have clients who still take a “full” physical every month, most businesses with proper policies, procedures, and oversight are able to limit the process. Inventory is a big job but there are certainly ways to make the inventory count easier for all involved. I hope your team leaders are willing to work with you to get policies and procedures in place as well as encourage compliance.

Featured image by SparkFun Electronics; post images licensed for use via Flickr CC 2.0 and Pxhere Public Domain.

How to Improve Profits Through the Use of Quality Control

Business woman with a tablet working on quality control and team management.
Quality control extends well beyond checking for defects of a manufactured product or service prior to delivery. Effective quality control is ubiquitous in an organization. It supports the complete and effective performance of each job while ensuring every interaction with the customer is successful. Expectations made clear for every position as to how each job should be performed and the ways departments should communicate/interact is key to successfully embedding quality control into your organization.

Where does quality start? It starts with the culture of the Company and the procedures in place to achieve the desired quality. If the transfer of poor quality products within your business is not accepted, they will never get outside the organization. Quality control is universally implicit in each process and position. Each person in the Company must understand how to do their job at the highest level of quality possible with the resources to actually do it.

How Strong Quality Control Will Benefit Your Company

Man selection customer feedback from three different faces; happy, sad, and indifferent.
Photo by Tumisu

Quality control involves more than checking for flaws prior to delivery. Whether a manufactured product or a delivered service, if top quality is not being achieved, something in your Company’s process needs fixing. While some make the distinction between Quality Control (removing the inferior parts from the process) and Quality Assurance (the practice of preventing defects), we will use the term quality control as a comprehensive term.

Over the last several decades, many concepts introduced apply directly to quality control, further emphasizing its importance. Kaizan internalizes continuous improvement while ISO certification ensures documentation and consistency of the process/product. However, the real purpose of quality control is to assure customer satisfaction resulting in higher profitability. A lack of quality control is inefficient and extremely costly; it eats away at your profits and hurts your business.

The easy-to-spot costs of a lack of quality control start with the return of a product or dispute in the payment for services. The Company has the obvious costs of accepting the return and resolving the dispute; these costs include shipping costs absorbed, use of internal resources to mitigate the customer dissatisfaction, issuing a credit memo or refund check, restocking the product and review of the process which allowed the low-quality product to be delivered in the first place. The path to correcting these financial burdens and small annoyances within the business starts with a brainstorming process to really understand what went wrong and in which department.

Understanding the Root of a Quality Control Problem

Two business ben brainstorming over a piece of paper with laptops.
Photo by Helloquence

What is the analysis to keep this problem from happening again? A few obvious questions to ask include: How did a defective part get to a customer? Did quality control fail at an inspection point? Does the warehouse have a separate area for defective parts? Did the inspection of material take place? Was there adequate supervision of the shipping department? Was there adequate training for the service provider? Was the supervisor aware of the problem? Have we had issues with this employee in the past?

The more important questions to assure high quality and customer satisfaction start at the beginning of the process. If you refuse to accept the execution of poorly made products, they won’t exist within your organization. Quality must be pervasive and each person in the Company must know how to do their job according to the effective procedures established.

How does each person’s understanding of high-quality performance contribute to profits? Profits improve with the smooth integration of all processes and knowledge transfer of pertinent information. Customer satisfaction is the ultimate objective and setting a high expectation of performance by each team member will improve the overall quality of products and services. Customer satisfaction without costly delays, wasting assets (money, time, materials and equipment) and duplication of effort, results in higher profits. Therefore, each team member has the responsibility of producing high-quality work.

What Does High-Quality Performance Look Like?

With knowledge of high-quality expectations, each department operates correctly with a clear understanding of their role. Defining quality control expectations for each role in the company is an important part of achieving quality.

So, what does high-quality performance look like?

  • Salesperson – As the customer is defining their needs, the salesperson focuses on meeting those needs. Let’s say the customer is looking for an outcome requiring special handling, the salesperson will work closely with manufacturing, pricing and possibly others to solve the problem. They will also document the solution, the costs and pricing to assure customer satisfaction. (We avoid over promise/under deliver and take the first step toward customer satisfaction.)
  • Order Entry – This team is aware of the importance of variances from the norm and clearly notes such in the order. (We avoid misunderstanding the customer’s expectations and move closer to customer satisfaction.)
  • Purchasing – After providing input on the solution, purchasing gives vendors a “heads up” on possible needs. They adjust quality, timing, and quantity of the order, taking into account any special recommendations. (We avoid rush deliveries, prevent quantity and quality issues with raw materials and integrate the customer’s needs with those of manufacturing.)
  • Receiving – They understand the importance of the quality differential in this order and perform a qualitative as well as quantitative test of the material. Thanks to effective procedures, receiving knows to pass on the appropriate “paperwork”. (We avoid expending internal manufacturing resources using the wrong raw material.)
  • Accounts Payable – Properly paid vendors make the process easier for purchasing to arrange special requirements. Quality control procedures and a clear budget for the business help them better understand the Company-wide importance of timely and accurate processing. (We avoid ordering delays and special processing for inaccurate or slow payments.)
  • Manufacturing – Production planning and scheduling is prepared to meet the customer requirements. All processes support the timely, accurate and efficient production of the customer’s needs:  materials are ready in the quantity and of the quality necessary, shop schedules move efficiently through the stages of production with virtually no delays and operations perform without error wasting no material or labor. Production can now fulfill the order with the least resources and waste possible. (We avoid waste and delay to meet the customer’s needs effectively and profitably.)
  • Shipping – Customer satisfaction hinges on the receipt of the right product at the right time. The goods are provided at the time and place required with proper notice to the internal team. (We avoid customer dissatisfaction from delays or inaccuracies, ultimately getting closer to complete satisfaction and higher profits.)
  • Billing – Billing the customer accurately and in a timely manner will assist in the collection of money due to the Company. They send the invoice to the proper customer with the correct amount and mail to the correct address. (We avoid unneeded customer questions, consuming internal resources and collection problems related to improper billing, as well as maintain cash flow to support operations.)
  • Cash Receipts – Accounting posts payments timely and accurately to customer accounts. (We avoid waste of internal resources, answering unneeded customer questions and diluting collections efforts.)

Quality control is a mindset that should be a strategic part of each process in an organization. Random problems are likely to occur in any system causing unforeseen errors to happen, but when quality control is the basis for the performance of each position in the Company, a higher level of work is expected and achieved. Customer satisfaction means higher profits and there is no better reward for a growing business.

Featured image via Pixabay. All images licensed through Unsplash and Pixabay.