Just In Time Business Planning
Having cut my Project Management teeth in Logistics, I have always been drawn to Just In Time (JIT) techniques. Ten years ago, the companies I worked for all seemed to want to extend the JIT concept in manufacturing to business logistics. Indeed, it seemed like JIT was like the Holy Grail of supply chain logistics; why keep excess stock around when you can plan it for a minimal of storage and save the budget?
Today, as I work with small business owners to help them develop their businesses, I see a lot of people trying and failing to apply the JIT principle to business planning. Why waste time and effort planning now for a moment that is so far down the road it seems it will never come? This is a great idea, but like all great ideas, the benefits are only realised in the execution and just in time business planning is notoriously hard to execute, especially for small business owners.
It's easy to understand the attraction to JIT planning, especially for small business owners looking to leverage the agility that is one of the biggest competitive advantages of being small. Just-in-time business planning gives you the ability to come up with new and profitable ideas for your company while the marketplace is just right for them. The opposite means falling behind and instead of being known in your market as an early adopter, your company may be known as a latecomer.
Unwieldy large companies with their lengthy decision making process find adapting quickly to respond to risks or opportunities in the wider business environment extremely difficult. Small companies with fewer stakeholders can catch opportunities or act to mitigate risk much more quickly. By failing to adopt a just-in-time planning mechanism within your small company, you can end up missing the boat and failing to tap into this opportunity for sales growth or fall foul of a risk . There is something to be said for the stability that traditional planning offers, but if provision is not made to allow for just-in-time strategic planning in association with traditional efforts, small businesses are surrendering one of their largest inherent advantages over larger organisations.
JIT planning is not without risks itself. The danger is, of course, that you will make a poorly informed decision “on the hoof”, and have no properly developed alternatives in your back pocket for when something inevitably goes wrong.
To cope with failure, backup options should be looked at, or alternative scenarios where the JIT execution fails – what happens next? Failure is acceptable if backup plans have been made; it is only when there is a single lifeline with no redundancy that things go awry.
The main risk of just-in-time planning is overestimating the popularity or effectiveness of a new tactic or market sector. Sinking too many company resources into efforts that fail to produce the desired result can lead to over-extension and lost money. It is necessary to balance efforts and carefully consider the options afforded by just-in-time planning before sinking too many resources into this area. While there is risk in most industries, jumping too quickly or too far into a new arena can have lasting and devastating consequences.
When carrying out just-in-time planning, it is important to focus on projects, rather than the business as a whole. A budget must be built for projects that come up, while the remainder of the budget is kept in place for ongoing efforts. Then, set clear, simple goals in any new project and measure delivery of the stated benefits of the project. This makes it easier to see if these goals are achievable without putting the entire company at risk.
This is a difficult balancing act to achieve. That’s precisely why a service like Continuous Business Planning exists and is so beneficial to small businesses. If you want to incorporate the power of Just In Time Planning to your business, contact us today.