I was helping my client use their computer systems to provide useful management information. We were talking about project tracking and how, by recording the status of each project and the date that it changed they could create a simple traffic-light system that would show at a glance where things were going awry.
We went on to extrapolate from the specific to the general.
- All businesses can be thought of as a series of flows and balances (or pipes and buckets if you prefer). Management information tracks the speed of these flows, the volume of flow and the level in the buckets. Examples of flow volume are number of new enquiries per day, value of invoices issued per month or, in my client’s case, projects completed per week. Examples of flow speed are average project duration, sales lead-time or quote turnaround time. Examples of levels are debtors, or quote bank, or cash in the bank.
- Every part of your business can be thought of in this way. When think of it in this way then you can identify the volume, speed and level measurements that tell you how it is performing. You can spot leaks, blockages and levels that are too low or too high and fix them. You can improve things.
- Efficient management focuses on exceptions. Your management information at the top level should be designed to highlight exceptions. If the reports you use are long and detailed, with the issues that require attention hidden amongst lots of other stuff, then the reports need fixing. If the only way you can control a process (or your whole business) is by checking on every project or transaction then you need better management information.
- Once you have applied this approach to one process then you can apply it to all your processes.
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