FUNDING BUTTON LINK
Showing posts with label business and project planning. Show all posts
Showing posts with label business and project planning. Show all posts

Monday, January 14, 2013

Are Bottlenecks And Chokepoints Killing Your Projects?

Share this ARTICLE with your colleagues on LinkedIn .








Bottlenecks and choke points are the points along the critical path to your project's completion where the entire system either slows down or comes to a complete halt because there is a critical and dangerous dependency on some person, protocol or procedure in the system who or which must perform some operation, inspection or issue some approval before the process is allowed to continue.

Call them "red tape," "hurdles," "roadblocks"... it makes no difference. They are usually an endemic and culturally entrenched (and generally accepted, despite the fact that they are consistently acknowledged as being a problem) cause for projects not being completed on time, or for budget overruns.

As a business owner, strategic planner, project manager or entrepreneur you have a responsibility to structure your plans and paths to minimize the existence or potentially negative impact of these choke points in your business or project plan. And it will require that you either 1) re-visit the incremental structure of your plan, and change it as and where necessary; or 2) perform an operational review (audit) and evaluation of the incremental steps in your plan's or process' existing critical path toward reaching its target, and taking some corrective action.

Here Are Your Options In Mitigating This Type Of Problem:

1) Design or re-design your process or protocol to eliminate the number of these chokepoints to the greatest extent possible;

2) If you come to a node or point in the process where a chokepoint is inevitable and unavoidable, be certain that you have redundant resources at the ready to be certain that the time loss, productivity loss, and drag on momentum are minimal. Examples: If the one check signatory is out of town, be certain there is another one present; if one inspector is off on a break or unavailable during the production shift, be certain that another is present; if one special analytic tool or mechanism breaks down, be certain that you have a spare one on hand to use in its place;

3) Create overrides or bypasses at these critical points if it is possible to do this without creating a hazard or negatively impacting quality -- overrides and bypasses can become too convenient and are often subject to abuse -- from a behavioral and industrial psychology standpoint, monitor or sample check the outcome or quality of output when these special exceptions are employed;

4) If possible, and if it is cost effective and reasonably easy to do so, "widen" those chokepoints (similar to loosening your tie or taking the kink out of a garden water hose) by creating parallel processes at those points which then re-converge into the singular path;

5) If a chokepoint or bottleneck exists simply because your transactional volume (or your workload) is simply too high, determine a threshold where that bottleneck warrants an additional person, machine or program to handle greater capacity. This requires an ongoing evaluation of your systems and procedures, and makes the case for using scalable solutions or resources however and wherever possible. When you can deploy a scalable solution at a critical point, your entire operating protocol may well benefit by it.

If we were to look at a process which had a threshold solution (i.e., hiring the redundant expert or purchasing the additional drive when a certain volume of throughput is reached) versus a process which had scalable solutions at these crucial junctures (i.e., where the data handler or robotic inspector or test checker would just require a higher setting of some sort), the first would look like a step function, while the second would look like a continuous function. The image at the top of the page illustrates this comparison.

Douglas E. Castle for The Business And Project Planning And Management Blog

Sponsored By: CFI - CrowdFunding Incubator LLC  





View DOUGLAS E. CASTLE's profile on LinkedIn

Douglas E Castle
All Blogs & RSS Feeds

Share this page
Contact Douglas Castle
Follow Me on Pinterest



Financing



CFI, C.F.I., CrowdFunding Incubator,  crowdfunding, crowd funding, incubators, accelerators, finance projects, listing services, start up, small business, SME, funding, capitalization, financing, leverage, company services, management, marketing, fundraising, technology, mentoring, advice, media, branding, memes, business tips tricks tools and resources, entrepreneur, forum, discussion, applications, technologies, risk assessment, business model, strategic planning, organizational development, connections, networking, early-stage, first-round, angel  funding, venture capital, credit lines, assistance, business growth, biz builders, social media power, delegation, automation, monitoring, metrics, brainstorming, meetups, joint ventures, partnerships - http://CFICrowdFundingIncubator.blogspot.com, http://www.CrowdFundingIncubator.com, marketing, messaging, news releases, free, gain market share, increase backlinks, SEO, influence, disruption theory, directory, RSS feeds, Douglas E. Castle, blogroll, blogs, crowdfunding blogs...


crowdfunding websites, crowdfunding incubators, crowdfunding platforms, crowdfunding startups, crowdfunding news, crowd funding news, crowdfunding updates, crowdfunding rss feeds, crowdfunding incubator, CrowdFunding Incubator, crowdfunding accelerator, crowdfunding projects, crowdfunding ventures, crowdfunding sites, crowdfunding associations, crowdfunding organizations, crowd funding, project finance, micro loans, venture capital, micro-ventures, angel funding, crowd funding, project fundraising, crowd funding sites, crowd funding resources, crowdfunding tips tricks tools techniques, CFI, CrowdFunding Incubator LLC, crowdfunding capital, capital sources, CFI Featured Projects, CFI CrowdFunding Incubator, Crowd Funding RSS Feeds, CrowdFunding Incubator C.F.I., SME, SBA, MBE, WBE, DBE small business grants, loans, credit, growth capital, non-bank, fund a project, kickstarter, Indiegogo, crowd funding start ups, new crowd funding sites, crowd funding laws, JOBS Act, crowd funding contests, entrepreneurs, innovators, inventors, applications, funding technology, growth capital, seedling businesses, kiva, socially responsible projects, crowdsourcing, crowd sourcing, funding phases, business plans, presenting your business idea, crowd forums, government business assistance programs, business mentoring, free business resources and advice, http://www.CrowdFundingIncubator.com, http://www.CFICrowdFundingIncubator.com, http://www.CFIEnterpriseResourcesGroup.com, Douglas E. Castle blogs...

Saturday, March 17, 2012

Sensitivity Analysis: Your Stress Test - [Note: A More Detailed Re-Posting]

Share this ARTICLE with your colleagues on LinkedIn .








During the course of these three next articles (starting with this one) on The Business And Project Planning And Management Blog, we will cover three crucial topics. Each one is essential to thorough business planning, project planning and risk assessment. They are:


1) Sensitivity Analysis -- Your Business' "Stress Test";


2) Breakeven Analysis -- Your Business' "Tipping Point";


3) Variance Analysis -- Your Business' "Marksmanship".

Sensitivity Analysis (your business' 'stress test') is one of the most useful analytic and planning tools ever invented and it is dramatically underutilized. It is an anticipatory device which can expose each and all of the areas of vulnerability in your business or project plan. Following is a frighteningly confusing diagram which I was going to use to illustrate some aspect (any aspect!) of Sensitivity Analysis. I was too confounded by the picture to post it up at the beginning of this otherwise important and serious article; so, I'll just put it here. Ignore it if you can. My apologies.

Senseless Sensitivity Analysis Illustration which serves no useful purpose.
Sensitivity Analysis is utilized to isolate the effect that a change in any one independent business variable will have on profitability. It truly shows the sensitivity (or vulnerability) of your business or system model to a change in any given independent variable. It not only mathematically demonstrates the amount of the change, but it shows the degree to which a seemingly small change can disrupt profitability.

If it is used as an analytical tool with respect to each and every component or aspect of your model, it will not only provide you with the degree of vulnerability which your business has to any one of its "moving parts," but it allows for pre-emptive and multidimensional planning for a shift in any of the value of any of the components.

An example of these components (independent variables) follows:

A business, seen as an isolated, defined system is really like a multivariate equation, where each component contributes to the ultimate dependent variable -- profit or success. Some of these critical equation variables (using a highly-simplified business model, i.e., the legendary "Acme Widget Company") include:

1) your selling price per unit - which could relate to competition, market demand, branding, et cetera);

2) the volume of units which you sell - which could be related to your market share, the aggressiveness and number of your competitors and, of course, demand, etcetera;

3) your direct cost to produce each unit at a given production level (this cost is usually considered a variable cost), but it actually may behave more like a  "step" function, where a larger scale of manufacture permits you a lower cost per unit sold due to volume discounts, efficiencies of scale. Incidentally, if your finance your company's sales or purchase orders and this cost is subject to fluctuation in terms of interest rates or discount rates, these count as variable costs, too;

4) your costs to facilitate sales (such as marketing, advertising, branding, public relations, social media sales commissions, celebrity endorsements, and the like;

5) your fixed cost required at any level of production - whether you make 1 widget (i.e., the extremely limited edition), or 5 million widgets (i.e., you have a 43.7%* share of the international widget market, and you even post banners at NASCAR, and donate funds to construct entire wings at children's hospitals).
-------------------------
* I've invented this statistic. I thought it would be a clever diversion from serious, meaningful, instructive writing. And it was.

The above components can be organized into categories (or modules) in a profit and loss template, and you could see the effect on profit or potential magnitude of loss by inserting a series of different values for any given variable in the template.

When you perform this simulation exercise on any one particular variable (we can call it the 'independent variable,' the 'isolated variable' or the 'target variable' -- they are all synonymous) in the profit and loss template, you can see its singular effect on the bottom line, and the level of sensitivity or vulnerability which you have to that target variable.

If you were to do this exercise with each category as the sole target variable (leaving the others the same, to the extent that that was logical), you could determine certain critical "alarm" levels for each variable. Going further, if you could create warning levels for each of these variables at which would trigger these alarms prior to their reaching critical levels, you would have some true "fail-safe" or "mitigating" controls on your business before you were to even construct it.

Going a step further, if you truly understand the factors that govern each of the analyzed variables, you can truly be ahead of any negative ripple in your business. If you intend to operate in a business where gross profit margins are small and your cost of goods sold (what you pay your supplier to obtain the goods) could rise significantly, you must prepare a contingency plan. This rise in cost can be brought about through a number of mechanisms, including, but not limited to: 1) dealing with a monopolistic supplier; 2) dealing with a sole source which has grown too big to favor your business with good prices; 3) a genuine shortage of a commodity (scarcity) which is driving the cost upwards; 4) ordering quantities which are too small to give you the benefit of a quantity or bulk purchase discount, and a host of others, each of which can be identified and addressed.

Stress test your business or project plan prior to implementing it by utilizing sensitivity analysis. Find your stress points and have a contingency plan to address each and every one of them. Once you've identified vulnerabilities, sensitivities or risks, you can mitigate each one of them in your planning and constant business monitoring process.

Fortunately, there are some sensitivity analysis programs and tools which you may deploy either prior to a business start-up (sort of like a simulation drive), or on a business which is already in operation (sort of like a 'pit check').

If you'd like, you can simply enter the following search terms into Google for a veritable cornucopia of programs and tools to make this important exercise easier:

sensitivity+analysis+programs+tools


Douglas E. Castle for The Business And Project Planning And Management Blog


Related articles






Share this page

Tuesday, September 27, 2011

Douglas E Castle Leaves TNNWC - 09.27.2011

Share this ARTICLE with your colleagues on LinkedIn .



Public News Announcement
Douglas E Castle Leaves TNNWC to Pursue Other Interests
27th September, 2011 - Westchester, New York
---------------

Dear Friends, Readers And Colleagues:

This is one of the most difficult letters that I have had to write. While I am quite enthused about the challenges and opportunities which lie ahead, I am more than the slightest bit forlorn about what I am forced to leave behind.

Effective one week ago (29th September) I officially left my assignment with TNNWC Group, LLC and formally resigned from my duties as the Company's Acting Chairman and Chief Executive Officer.

After much consideration, I have decided to pursue my own interests and passions in writing, speaking and strategic planning, as well as a number of my long-neglected hobbies and research in a number of areas. The prospect of working on my own is a daunting one, and I am grateful for the friendships and camaraderie which developed during my time invested with TNNWC, and continue to remain a source of inspiration and support.

This is both a timely and an amicable parting. I will continue to publish prolifically, and the rights to re-publication and re-printing of any of my syndicated blogs, RSS feeds and other content shall continue to be available, without restriction to TNNWC and Adam J. Kovitz, who remains a dear friend and shall be holding the reins at TNNWC.

I intend to remain actively engaged in my areas of business expertise domestically and internationally, and will be doing so on a very selective basis.

To those of you whose emails, networking invitations and requests to me have gone unanswered, please accept my profound apologies. I fully intend to get caught up with all of my delinquent correspondence during the next two weeks. Your patience with me is deeply appreciated. As a number of you might have surmised, things have been beyond hectic.

None of this constitutes any type of retirement; rather, it constitutes a renewed pledge to my own personal and professional growth, and to the next stage in the evolution of my life.

I wish each and all of my former associates at TNNWC and its affiliated companies the best of health, happiness and fulfillment in all of their endeavors. I am appreciative of the opportunity to be of service, and I am thankful for all that you have taught me.

With Great Respect,

Douglas E Castle

http://aboutDouglasCastle.blogspot.com
http://www.LinkedIn.com/in/douglascastle
####
HEADER TO SAVE TROUBLED COMPANIES
WE FIX BROKEN COMPANIES - DouglasECastleBlog
twitter-button.net
View DOUGLAS E. CASTLE's profile on LinkedIn
Douglas E. Castle
Bookmark and Share