We often don’t think of a franchise and a manufacturing business as being an easy match, but systematizing your business according to the franchise model can vastly improve the functionality and profitability of your company. Tools such as an ERP system can help you boost efficiency and keep track of everything needed to streamline your business. In this episode, the co-founder and president of ProShop ERP, Paul Van Metre, shares the practical steps to take towards a more refined and systematized set of processes for optimal company performance.
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Paul explains that the goal of modeling your business after a franchise isn’t to become the next Subway or McDonald’s. Instead, the vision is to design a franchise prototype. Creating standardized systems for every process and goal within your company will help you create repeatability and redundancy for every task and will help you pinpoint problems - leading to continual refining. The goal is to have the same and reliable output as a franchise delivers - consistent value, low labor costs, impeccable organization, and documented workflow that produces predictable product.
Whether your company is growing by leaps and bounds or not - establishing systems that streamline your processes and help ground the expectations and values of your business will help take your customer experience and your efficiency to the next level. The goal isn’t to duplicate your business into a thousand perfect replicas. The goal is to run your company in the most efficient and proven method available - with a franchise mindset applied to the small business structure.
What processes do you apply to the franchise model? Paul says that the answer is all of them. Systems like ERP can help minimize the labor involved in documenting your processes for storing fixtures, programming, job descriptions, hiring, training, company expectations, and procedures for making each and every product. Paul explains that one huge step for his company was standardizing jobs. Making sure that every person in your company is following the same procedures creates reliability.
Jim uses the ERP system in his discussions with new clients, allowing them to view the numbers and procedures used to create the products they need. With a standardized system in place, every operation is itemized and trackable. All the details are available in one place - not scattered across different platforms and mediums. Documenting your systems in one location allows for a higher level of professionalism that makes everything black and white for your customers - and for your employees.
Paul explains that you don’t need to create brand new procedures in order to streamline your business. Begin by bringing your team onboard with the mission to document every process you already have in place. It’s a team effort - unless you are a one-man shop. Each individual is going to have specific knowledge that is vital to the tribe. So much more information can be documented with ease when it is all inserted into one place - such as an ERP system. While it may seem daunting at first, it becomes easier the more your team utilizes it. Be sure to listen to the entire episode for Jim’s story of how implementing an ERP system in Carr Machine & Tool helped him keep a clear and focused approach to company growth.
It’s surprising how many steps you can eliminate when you centralize all of your processes and procedures in one location. Eliminating needless or unprofitable steps creates greater efficiency, which leads to greater profitability. It also helps streamline your customer experience so that they know exactly what to expect and are met with quality time after time.
Paul shares the 80/20 rule of profitability. Once you have the systems in place to track the profitability of each product, order, and customer, then you can begin to see the 80/20 rule take place. 80% of profits are derived by 20% of your jobs, and 20% of your jobs cause 80% of your losses. With a systemized process, you can see which jobs are losers and which are profitable. Having a procedure for killing off the losers will help keep your company moving forward and allow for less wasted time and resources.
It’s important to analyze how you define job profitability and how you analyze the urgency of a request within your business. Streamlining your processes and procedures will lead to unearthed problems within your systems. Constant improvement needs to be an understood key-to-success by everyone on the team. Humility and honesty are vital to the improvement of a company, but leaders don’t need to be bogged down and notified of every problem that arises. Know, as a leader, how you will analyze and prioritize what needs to be addressed, when, and by whom. Jason shares his strategy of IDS (Identify, Discuss, and Solve). Encouraging your team to understand why a problem occurred and report it into a centralized system - like ERP - will help minimize the risk of the same problems occurring over and over again. Be sure to listen to the entire episode for more insight into why a franchise model may be the next step you should take with your manufacturing business.