Business Scaling Facilitate With Basic Implementation of SOP and WI in a Mfg Business March

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‘Crossing the Chasm’ is a concept developed by Geoffrey A. Moore in his book titled “Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers.” Although initially aimed at high-tech products, this notion extends beyond technology, impacting many small manufacturing and emerging growth businesses as well.

Part 1 –

The central idea revolves around the challenging transition companies face when moving from serving early adopters to reaching a broader market of mainstream customers.  Early adopters embrace new technologies despite risks; to achieve greater revenue success small businesses must overcome the chasm to reach greater market acceptance and business viability.  While there can be internal resistance to overcome, incorporating the first semblance of process documentation in production and non-production functions alike can be a very critical initiative serving as a catalyst to cross the chasm.  while the early majority waits for proof of productivity gains.

Implementing a basic level of Standard Operating Procedures (SOPs) and Work Instructions (WIs) in a small business can indeed be a strategic move to support growth and efficiency.

Here are the top three benefits:

1. Scalability: SOPs and WIs provide a clear framework for operations, which is essential for scaling up. They offer a standardized approach to tasks and processes, making it easier to onboard new employees and expand the team without sacrificing the quality of work or efficiency.

2. Quality Assurance: Basic process documentation ensures that all employees understand the correct way to perform tasks, which leads to more reliable and repeatable outcomes in product quality. This reduces the risk of errors, scrap, and product rejections, ultimately leading to higher customer satisfaction.

3. Employee Training and Knowledge Retention: SOPs serve as a valuable tool for training new employees and for retaining knowledge within the company. They act as a reference point that ensures all team members are aligned, which is especially important when key employees leave or when the company is scaling up. This documentation helps prevent knowledge loss and ensures that the business does not rely too heavily on any single employee.

By implementing SOPs and WIs, small businesses can create a foundation that supports a more controlled, less chaotic growth trajectory. This structure not only facilitates scaling but also enhances overall customer satisfaction by delivering consistent service and product quality allowing the business to mature in a sustainable manner.

Part 2-

A small, emerging-growth manufacturing company in the seven-county region around the Twin Cities (Minnesota) faced challenges with process inefficiencies, increasing production scrap, quality concerns raised by customers, and the resulting product return.  By implementing detailed process documentation, they were able to achieve remarkable improvements.

Before implementing process documentation including standard operating procedures (SOP) and work instructions (WI), the company struggled with:

• Inconsistent product quality.  This resulted in lot sizes larger than necessary in planning, unnecessary equipment utilization, and increased waste & rework.

• Inconsistent process cycle times. There were frequent delays in production due to unpredictable and variable cycle times on several key processes for production.

• Employee training. Effective training was not possible without defined standard operating procedures (SOP) and work instructions (WI).  This suffocated employee development and stifled their contribution to increased capacity requirements.

Implementation of process documentation via SOPs and WIs was founded on 1) leveraging production employee know-how and 2) providing non-production time for their documentation efforts and 3) assigning responsibility and the oversight of engineering to facilitate translation of this know-how into visual work instructions assuring employees with English as a second language (ESL) could effectively be trained and assimilate the know-how. Additionally, as a smaller business, the company developed SOPs and WIs initially for only more complex stages of production (~40%). Visual work instructions via computer monitors at workstations and accompanying flowcharts were clearly illustrated to enhance understanding and was hosted in a centralized digital platform[1] to make the documents easily controlled yet accessible.

After 4 months of the initial creation, training, and implementation of the basic foundation of SOPs (in support functions primarily) and WIs (production, warehousing, quality assurance, et.) the company realized improvements in these three key areas:

• First Article Inspection or First Time Pass improved 25%:  Product quality became consistent with a significant reduction in defects uncovered typically at final inspection.  Customer concerns and returns showed initial signs of a downward trend.

• Production times were reduced, and quoted manufacturing lead-times and delivery dates improved.  On-time delivery improved from 82% to 88% with high confidence for further improvements to come.

• Employee onboarding training times were reduced by nearly 30%, and existing employees were able to cross-train effectively.  Subsequent in-process quality audit revealed a 90% compliance rate for demonstrated use of the new visual work instruction system.

The company’s commitment to process documentation led to a more streamlined operation, better product quality, and increased customer satisfaction. Over the following 2-1/2 years, this transformation in process documentation, while not overbearing, facilitated a less chaotic scaling of their operations.  As a result, revenue expanded with both current customers and new customers resulting in a 20% year-over-year sales increase and gross margin recovered back over 50% for the first time in four years. This example of a Minnesota-based smaller manufacturing business illustrates how even basic process documentation can profoundly impact a business’s financial success, customer satisfaction, and employee retention. It illustrates the beneficial impact of such process documentation to cross the chasm and set entrepreneurial organizations on a new trajectory toward growth and viability.

[1] Trainual and ProcedureFlow are two of many platforms.