In the Battle for Productivity, Your Country Needs You

So much recent press around the government’s Productivity Commission report reminds me of that WW2-era 'Uncle Sam' poster you used to see in funky bars and uni pubs long ago. Each, in their own way, a call-to-arms. 

In the fight to protect the country’s prosperity, productivity, and Aussie way of life, your country needs you!

With SMEs being the powerhouse of the Australian economy, it’s especially critical that business leaders across this sector enlist. And in the battle for efficiency, digital technologies are the most powerful weapons in the arsenal.

Calling all leaders

And yet, there is hesitancy. An article in the March 20^th edition of the Australian Financial Review lays much of the blame for slow growth squarely at execs. ‘Tech Laggard Execs Squander Growth’ points a finger at business leaders whose lack of tech capability has been holding company innovation back.

“The substandard management and technology skills of Australian executives may be contributing to the nation’s waning innovation and productivity, the Productivity Commission has warned. 

The frank assessment puts pressure on businesses to improve the management and technology skills of executives…  Firms with stronger management are more likely to make good decisions about whether or not to adopt new technologies and practices, and when and how intensively to adopt them.’’ 

Those firms, the commission said, were also more likely to have the ability make the organisational changes needed to benefit from transformative technologies.” 

Aside from issues of tech confidence, a significant challenge for SMEs is the enduring belief that automation is not relevant to them – that it’s too hard, too costly, and really only feasible for the big players.

But inaction by SME business leaders is a sure-fire way to be left behind. Failure to innovate and automate leads to reduced productivity → reduced competitiveness → loss of customers and → (worst case) the loss of your business.

Luckily, there’s plenty of evidence that the entrepreneurial spirit is alive and well in Australia. If you ask me, SMEs - especially manufacturers, wholesalers and distributors - are innovators at heart. Just peek inside the factory or warehouse and you’ll see automation firsthand. We already employ sophisticated machinery, warehouse management and logistics systems, smart picking and RF devices.

Automate for Australia 

So what more do we need to change? How do we accelerate productivity gains for our companies (and thus, our country)?

I recently wrote an article on Automation in which I analogised the joining up of the Pacific Highway sections between Sydney and Brisbane to illustrate the benefits of automating all those manual process hand-offs that happen between business systems. If we are to meaningfully boost our productivity, it’s these processes which cry out to be automated.

Yes, there has been significant investment in digitisation by many of our companies. But there is still so much ‘swivel chair automation’ going on within SMEs. Five years ago, several innovative CV customers told us firsthand about the challenges they faced with manual process bottlenecks. A common theme emerged, in which their Customer Service staff were spending most of their day keying emailed purchase orders into their systems so their warehouse could pick, pack and ship. Looking for a better way, they approached us for solutions.

Inspired by these customers, we brought Lucy to market in 2017. Since then, Lucy has freed up hundreds of customer service staff who were once bogged down performing swivel chair automation. By letting Lucy automate their sales order entry, they were able to move onto more value-adding activities to drive efficiency and productivity across their order-to-cash cycle.

Automation theory into action

If you’re considering automating your own business process, you may be wondering where to start. Here’s my battle plan:

Model A – Cost efficiency

If your business’ strategic advantage is cost driven, in today’s environment you will ultimately want to automate all across your internal supply chain.

From procurement ➞ inventory control ➞ sales ➞ distribution, your aim will be to drive cost out of every single process. Begin with the one you estimate to have the highest potential value and lowest cost/effort to change.

Once identified, your critical first step is to baseline what that process currently costs. Work with your finance and supply chain teams to arrive at a unit cost, then identify the constraints. Finally, calculate: if these constraints were removed, what would the new unit cost be?

Model B – Service delivery

Alternatively, if your strategic advantage is responsiveness, you’ll look to automate those elements of the value chain that don’t put responsiveness at risk. Again, begin with the process estimated at the highest potential value and lowest cost/effort to modify - but in this case be mindful not to compromise your unique selling proposition. Leverage business intelligence tools to identify pre- and post- constraint unit costs. These metrics will help build your automation business case, including projected ROI.

Obviously, the process goes deeper than I’ve outlined above, but the key steps remain:

• Understand your business and keep your strategic advantage in sight
• Identify processes that suffer constraints
• Baseline the current unit cost of the process
• Determine your new unit cost post-automation

Finally, it's important to remember - Automation is NOT an IT project. Yes, the IT team are important as facilitators, but at its heart, Automation is a business project.

So in the spirit of Uncle Sam’s old rallying cry, come on Aussies - Your Company and your Country NEED YOU.

Ready to explore automation options for your own organisation? We'd love you to get in touch.