From the way an order is entered into the system by customer service to the way a truck is loaded by a shipping associate, every company has its step-by-step method of executing everyday tasks. These “steps,” in getting a task completed are called procedures. While these procedures are common practice, what many companies do not do are standardize the work, document the procedure, and train its employees to the standardized procedures.
Other topics in the series are:
- Steps in creating effective SOPs
- SOPs and Continuous Improvement – how are they related and how do they help my company?
- Templates and examples of SOPs
As long as the job gets done, that should be enough right? Why do I need to invest company time and resources in developing and maintaining an SOP program? The answer is to the first question is false. Having an effective SOP program doesn’t just get the job done but get it gets the job done right the first time.
SOPs are important in many ways. First, an effective SOP standardizes the steps. This means every employee, assuming training was conducted, is expected to follow the same exact procedure. This increases productivity as there’s no more thinking involved on how to perform a task. The “thinking” part was done during the SOP creation. And at this point, once the SOPs have been signed off and training has been administered, it’s all about execution for the users.
Secondly, having SOPs reduces errors. So long as the SOPs were created with input from stakeholders (workers, supervisors and internal customers and internal suppliers), best practices should have made it on to the procedures. This means quality issues were addressed and countermeasures were embedded on to the processes.
Third, it’s good for employee morale. I took over a company’s distribution facility once where virtually every employee had his own way of performing the same task. No one knew what their inventory accuracy were, including management, but they would quote 95% to customers. Meanwhile, on-time shipment was below 40%, mainly because of the warehouse and inventory team. When I finally completed a physical inventory, their accuracy was at 30%. Not having SOPs resulted in distrust within the department and from other departments.
Lastly, an SOP process makes financial sense. Your operational cost will be reduced due to increased productivity (from having procedures and happier employees), and from lowered re-work costs as quality issues should also go down. And an optimized operation results in happier customers and an improved chance of additional sales.
Having Standard Operating Procedures is not an option but a necessity for any business, big or small, to be successful. It is even more important for small businesses since every dollar lost is much more to it than it would for a big company. While it is cumbersome and you will incur some cost from development and training, the return on investment will be ten-folds. From the cost reduction and contribution to increased sales, to the improved employee morale and having a process-oriented company culture, having an effective SOP program can and will prove to be a win-win for your company.