Strategies for Optimizing Your Company’s Performance

In 2024, improving a company’s financial and operational performance should be at the top of the list of commitments to be made.

A business’s financial aspects are often neglected by managers who focus more on improving business or manufacturing processes. Many companies do not employ specialist financial resources or even draw up annual budgets. They don’t carry out costing analyses, and end up setting the prices and rates for their products or services based on those of the competition.

Monthly monitoring of financial results

However, in these times of inflation and increased risk of recession, it is just as important to focus on the financial and operational performance of your business, in order to maximize its value.

By monitoring its financial results on a monthly basis, a company will be able to see the increase in its costs or the erosion of its profit margins as the months go by, becoming more agile in the face of economic upheaval.

For example, it will be able to know along the way whether it needs to compensate for this increase in costs by raising its prices or by improving its operational capacities.

What is looming in the coming months is the risk of an increase in certain costs, while our businesses will be under pressure to lower prices because of the economic slowdown. So, it’s on the margins that everything is going to come down.

By analyzing the costs per client and per product, it is possible to pinpoint the profitable and less profitable elements. In the field, for example, there are companies where 34% of clients are not profitable and 26% are generating losses. The ratio measuring marginal contribution will be of real importance in setting your prices without losing your shirt.

Management and production: Eliminating waste

By taking a closer look at financial performance, the company will be better equipped to determine its growth objectives and implement the necessary actions for improving its operational performance. And growth does not necessarily mean adding resources or production capacity to achieve its goals.

It makes more sense to turn to lean management and production methods, which focus on identifying and eliminating the waste that greatly reduces an organization’s efficiency.

Sources of waste

Here are a few examples of sources of waste:

Overproduction

There’s no point in producing more than demand, at the risk of generating too much inventory, wasted space and tied-up capital.

Stock accumulation

Unnecessary storage generates costs, and it is preferable to improve the supply chain.

Wait time

Delays, caused in particular by a lack of raw materials, equipment breakdowns or IT problems, are unproductive periods that obviously do not add value to businesses.

Unnecessary travel

Employees need to reduce the amount of time they spend travelling or handling things.

The importance of better operational optimization is such that a company could improve its production by more than 20%, without even having to add staff or equipment. In these times of labour shortages and economic uncertainty, such a strategy is bound to pay off.

In the age of robots and artificial intelligence

The digital transformation of businesses is another way of improving a company’s financial and operational performance. It must be at the heart of the business model and corporate development, which can now exploit a host of new technologies to improve their management and production methods.

In the age of robotics, wireless sensors, software, the Internet of Things (IoT), augmented reality, artificial intelligence (AI) and other cutting-edge technologies that can increasingly connect with each other, the digital shift offers the opportunity to create a smarter factory that can further optimize an organization’s management and production processes. We are even at the dawn of Industry 5.0, which takes this transformation even further by placing greater emphasis on the interaction between digital technologies and employees.

A digital plan will be needed to assess your situation, determine the processes to be put in place and prioritize the steps required to achieve your performance objective. For each process, an assessment of the expected benefits will be carried out. The selection of technological tools requires a structured approach that fits in perfectly with the digital plan.

Competitive advantage

This new development gives companies a competitive advantage and the opportunity to increase their market share. Companies that are slow to convert to digital technology perform less well and find it harder to grow, according to a number of studies.

Help with recruiting and retaining employees

This digital transformation not only has the advantage of making management and production activities more efficient, but also of tackling the labour shortage, while promoting employee recruitment and retention.

Automation and robotization initiatives enable companies to offer workers value-added jobs instead of performing tasks that may be repetitive or even dangerous.

According to a study by Sous-traitance industrielle Québec (STIQ) for dealing with the labour shortage:

Pay rises are often a temporary solution with a limited impact on increasing the value and quality of an organization.

Transformation supported by financial aid

Companies can even benefit from government financial assistance to support their digital transformation projects. One example is the Canadian Digital Adoption Program (CDAP).

Thanks to the ESSOR program, they can also carry out a diagnostic to find out more about their digital maturity and implement appropriate solutions.

Experts from Raymond Chabot Grant Thornton have been certified to carry out this digital audit and support businesses in their initiatives. However, companies wishing to take advantage of the government’s financial assistance should act quickly, as the ESSOR program is due to end on March 31, 2024.