One of the foundational aims of any businesses employing processes to create products or services is consistency. This can be hindered by members of a team producing different outcomes according to their perspectives and abilities. Such a scenario is neither desirable nor sustainable for business to function successfully and customers would be put-off, switch over or walk away due to the inability to experience consistency in a product or service.
To overcome this, businesses are known to employ SOPs, wherein every stage of a task is broken down and enumerated in detail and documented as a process manual to be followed by a team with a common purpose. This exercise ensures consistency within the process and the outcome that follows. Successful businesses are known to follow SOPs allowing them to standardize and formalize processes to improve productivity, reduce errors and save on costs. We at YRC are great proponents of Standard Operating Procedures (SOPs) and come with years of experience at developing and implementing them.
What are Standard Operating Procedures (SOPs)?
This can be termed as a set of documented procedures that a company puts in place to ensure products and services are delivered each time with the same consistency. SOPs are known to align with existing industry regulations, applicable laws and even operational & quality standards set forth by the company.
Reasons Demonstrating SOPs Reduce Cost & Increase Productivity
Now that we understand SOPs let’s look at how they are able to reduce costs and increase productivity.
Save on Employee Training:
When a new employee joins the company, he is expected to be provided training about the process he/ she is going to be involved with. But with SOPs in place, there would be minimal need for face-to-face training as a well-written SOP tends to be articulate with the inclusion of visual elements. The employee can get acclimatized to the process by himself thus saving the company of the costs associated with training. Such a seamless practice also helps in improving productivity as the employee always has the option of going back to the SOP in case he/ she is doubtful to master the process in the long run. For example, a well defined & effective SOP can save on the 2.1 – 2.4% of the company’s budget set aside for classroom training.
Improves Adherence to Regulations:
There are industries that are highly regulated and a deviation from set standards can be damaging financially and reputation-wise. To prevent such deviations SOPs can be written with built-in stipulations that prevent any deviations from occurring in the first place, thereby leaving no room for non-compliance. This, in the long run, can bring in enormous savings that could be lost on potential litigations and compensations to be paid out.
Reduces the Risk of Accidents:
Certain industries are accident-prone by nature and incorporating safety guidelines within the SOP will allow companies to offer a safe working environment for its workers. By creating safe work areas, a company stands to benefit as employees would not get distracted by safety concerns and productivity would improve naturally. Besides, with less or no accidents a company does not lose out financially from the costs arising from the aftermath of an accident. A company with enough precautions in place for accidents offers its employees great scope to increase productivity.
Identifies Areas of Improvement:
By the consistent use of SOPs in all processes, there is a good chance of employees coming forward with improvements related to a critical process. With the comprehensive understanding of the process and its nuances, an employee would be the most likely candidate to suggest improvement associated with a process. In the long-term, this can translate to savings in terms of time and money and can be directly attributed to improvements in productivity.
Ensures Business Continuity:
Every business would have contingency plans to cover for the absence of an employee is a critical process. This backup employee would be well served with the availability of SOPs that ensures the continuity of the process. Such measures prevent overall productivity from going down and avoid potential losses that might be caused due to an absent employee. Thus, an SOP is a critical component in ensuring businesses run smoothly by overcoming disruptions.
Once an SOP is in place, employees know it by themselves what is expected out of them. By laying down the expectations clearly in an SOP, you also remind the workforce that they are being monitored for their performance with potential incentives if they perform well. This makes SOP an integral catalyst that motivates employees to perform to their optimum best, thereby improving productivity. Research shows that as many as 35-55% of employees tend to avoid responsibility on an average and this behaviour tends to cost companies dearly. Such behaviour can be mitigated with SOPs
SOP documentation helps in standardizing operations to ensure accuracy and predictability because it guarantees a similar outcome each time for a repeated process. Over time, this document can serve as the underlying premise to delegate, outsource or automate the entire process to ensure an increase in productivity. Such an immediate switchover is not possible without breaking down the entire process into manageable steps with an SOP. Thus SOP can also be the basis for the company to scale up its operations manifold without second thoughts.
Saves Valuable Time:
Creation of an SOP always involves a competent stakeholder who knows the process inside out. Such a person incorporates his mastery over the process to create an SOP that gets the job done in the fastest possible time. An SOP then becomes a standard document that essentially supports an employee to improve their productivity with minimal intervention from the supervising staff. For instance, by implementing 157 SOPs a food manufacturer was able to put in place four packaging lines at the same time which otherwise would have been a daunting task considering they worked in three shifts.
By establishing an SOP you are banishing the guesswork associated with employee performance. In other words, without an SOP, gauging work performance is a matter of opinion without any objectivity. However, with SOPs in place, managers will have clear insights into successes and deficiencies associated with employee performance. This gets communicated to employees at appropriate forums backed by sound advice encouraging them to improve on their current productivity.
Standard operating procedures are efficient and effective for new and existing businesses alike. Once they are documented and implemented they guarantee positive results. Overall, it is a process of systemization, wherein the management is simply expected to play a supervisory role by checking-in every now and then while supporting people to perform at their peak. When you put the right systems in place, the intended results are bound to follow-through without major hurdles.
Your Retail Coach (YRC) is a leading agency that is known for making SOPs for not only retail businesses but many other industries. We are a leading management consulting and retail consulting agency in India and around the world with an array of clients whom we have offered effective & implementable consulting services.