Small and medium-sized enterprises (SMEs) are the backbone of Nigeria’s economy, providing over 80% of jobs and making up 96% of businesses. However, high operating costs and inefficient processes hamper productivity and profitability for many Nigerian SMEs. By optimising and streamlining operations, companies can reduce expenses while improving quality and customer satisfaction. This article explores key strategies Nigerian SMEs can leverage to trim costs, eliminate waste, and streamline workflows.
Conduct in-depth assessments.
The first step towards optimising operations is thoroughly analysing all business processes, resources, workflows, and expenditures to identify improvement opportunities.
Process Mapping
Create detailed process maps that outline each step and dependency within key workflows. Look for redundant steps, decision bottlenecks, and sources of delay. Process mapping provides visibility into inefficient activities.
Cost-Benefit Analysis
Scrutinise resource allocations and each expense. Determine whether their business value justifies the cost. Categorise expenditures based on necessity to inform reduction or elimination decisions.
Pain point identification
Identify major pain points, mistakes, and problems that impede workflow and productivity. Target these with process improvements to prevent recurring issues.
Benchmark Competitors
Research how industry peers structure efficient operations. Compare their best practices to identify gaps versus competitors.
Streamline Processes
Optimised processes minimise waste and complete workflows faster and more accurately.
Simplify Procedures
Eliminate unnecessary complexity in procedures. Simpler processes boost productivity and reduce errors. Provide employee training to refresh knowledge on process changes.
Automate Tasks
Automating repetitive, predictable tasks saves time and money while minimising human error. Prioritise automating high-volume activities.
Improve Scheduling
Smooth workflows by staggering start times, balancing workloads, and scheduling interdependent tasks efficiently.
Standardise Activities
Standardising procedures, forms, systems, and shared services maximises consistency and efficiency.
Monitor Performance
Track process metrics like cycle time, defect rate, and output to identify issues immediately. Control processes to keep them operating at peak effectiveness.
Drive Workforce Productivity
A motivated, aligned workforce maximises operating productivity.
Incentivize Goals
Link employee incentives to key performance indicators and production targets. Offer rewards for top performers.
Cross-Train Employees
Cross-train employees to increase flexibility in covering different roles. Multi-skilled teams adapt better during periods of high or low demand.
Foster Collaboration
Encourage collaborative problem-solving and information sharing among team members. Tap collective knowledge to improve processes.
Offer Development Opportunities
Invest in employee skills training and career development programs. Enhanced capabilities increase productivity.
Right-Size Workforce and Resources
The optimal workforce size and resource levels keep costs low while still meeting business needs.
Staff to Demand
Adjust staffing levels, use contract workers, or leverage overtime to precisely match labour demand without overstaffing.
Consolidate Roles
Consolidate overlapping roles and responsibilities into fewer positions when possible. Eliminate redundant roles.
Centralise shared services
Centralise company-wide services like HR, finance, IT, and legal into specialised departments with appropriate resources and expertise. This avoids duplication across business units.
Reduce Inventory
Cut excess inventory of raw materials, WIP, and finished goods by improving demand forecasting and inventory management systems. Excess inventory ties up working capital.
Streamline Supply Chain Operations
Efficient procurement and distribution processes minimise costs and delays.
Simplify Logistics
Reduce the number of warehouses, suppliers, transportation providers, and other links in the supply chain. Simpler logistics require less oversight and optimise asset use.
Improve Forecasting
Invest in data analytics and forecasting tools to predict demand more accurately. Match procurement and production to anticipated needs.
Automate Reordering
Automated inventory management systems trigger resupply orders and production scheduling based on usage and lead time data. This prevents shortages or overages.
Renegotiate supplier contracts.
Leverage growing purchasing power to renegotiate supplier and distributor contracts for better pricing and service terms where feasible. Committing to longer contracts can secure discounts.
Adopt lean methodologies.
Lean process principles optimise operations in many Japanese, American, and European companies. Nigerian SMEs can also benefit from lean thinking.
Eliminate Waste
Identify and eliminate “muda”—any activities or resources that don’t add value for the customer. Excess motion, overprocessing, inventory, defects, and waiting represent common forms of waste.
Maximise Workflow
Smooth the workflow by linking production steps so work-in-progress seamlessly moves through each activity without waiting or doubling back.
Embrace Kaizen
Promote a culture of continuous improvement via Kaizen events, where teams rapidly improve specific processes and then share lessons learned across the company.
Empower Employees
Push decision-making authority to frontline employees so they can quickly fix problems like defects or delays at the source.
Leverage Technology
Upgrading technology provides major productivity and efficiency gains while reducing manual work and errors.
Digitise Records
The transition from paper-based to digital systems for managing records, documents, communications, and data analytics. This accelerates information access and sharing.
Upgrade Systems
Modernise legacy IT systems, machinery controls, and software to maximise capabilities and integration. Newer technologies increase reliability and functionality.
Expand Internet Access
Provide high-speed internet access across the organisation, along with computers or mobile devices. This enables communication, information lookups, training videos, and other productivity enhancers.
Automate data entry.
Automating data collection and entry using barcode scanners, RFID tags, IoT sensors, and similar technologies reduces human effort while increasing data accuracy.
Adopt project management disciplines.
Consistent project management procedures reduce delays and keep initiatives on budget.
Define Milestones
Clearly outline all key milestones, deliverables, and success metrics before starting projects. Track progress against these markers.
Assign Responsibilities
Designate resource allocations, team member roles, and individual responsibilities upfront to avoid redundancy and oversight gaps.
Control Scope Creep
Adhere to project scope constraints and change management processes to prevent uncontrolled scope increases that drain resources.
Document Completion
Conduct final walkthroughs, testing, and approvals to validate project completion along with documentation before closing projects.
Maintain cost awareness.
Promoting company-wide cost consciousness helps sustain improvements.
Provide cost data.
Share operating cost data with employees to help them recognise the collective impact of small savings. Highlight areas with the biggest savings potential.
Report on Savings
Track and report on cost reductions, waste elimination, and other bottom-line savings from improvement initiatives. Publicise wins to keep the momentum going.
Reward Frugality
Praise teams and employees who deliver noteworthy cost reductions or process improvements. Feature their stories in newsletters.
Monitor Metrics
Establish KPI scorecards for key cost drivers. Review regularly to prevent backsliding on savings achieved in prior improvement initiatives.
Continuously Improve
Ongoing enhancement initiatives prevent stagnation and build world-class operations over time.
Conduct annual assessments.
Make comprehensive operational assessments an annual endeavour to re-identify issues and opportunities. Improvement is an unending cycle.
Review market innovations.
Regularly research competitors and other industries for new technologies, systems, and processes that boost efficiency.
Expand employees’ perspectives
Send staff to trade conferences, trainings, and networking events to bring back fresh ideas on optimising operations.
Collaborate with customers and suppliers.
Work jointly with business partners to identify mutual pain points and devise win-win process upgrades that benefit the entire value chain.
Conclusion
With rising costs and fierce competition, streamlining operations represents an imperative for Nigerian SMEs seeking profitability and growth. Following the strategies above allows companies to eliminate inefficiencies, maximise productivity, reduce errors and delays, fully align resources to demand, and promote a culture of continuous enhancement. Optimised operations confer both immediate and lasting competitive advantages.