cost cutting measures tend to be temporary in nature, and are often a
“knee jerk” reaction to a challenging business environment. True
operational performance improvement, however, is a strategic, rather
than tactical, move designed to improve performance for the long-term.
Granted, many near-term benefits can be realized from improvements, but
the real value lies in the long-term opportunities true change provides.
are 3 problems found in almost every business process in any
organization, and these problems can be responsible for a large portion
of the total cost of execution. When reviewing your business processes
for improvement opportunities, watch for these problems and consider how
they can be eliminated from your organization.
number one problem with any business process is waste – wasted materials
and other resources, wasted effort, wasted communication and non-value
added activities. Waste in a process is expensive, exhausting and
detrimental to a highly functional environment.
effort can manifest itself in a number of ways. Consider the finance
department which produces a monthly, 20-page report which is distributed
to six people, none of whom read it. Why is the report being produced?
“Because we have always done it that way”, or “Because Fred (who is no
longer with the organization) requested in 2 years ago.” What level of
financial investment is being made into producing a report which isn’t
used? Where could that investment provide a better return?
Obviously, wasted resources might be found in a manufacturing line where
excessive scrap material could be found. Consider other resources such
as water or electricity which could be reduced in use. How about
something as simple as document management – are you retaining a copy of
every document in a file cabinet when the same document is available
electronically? Are you printing documents or forms when not required?
inclusion of non-value added activities is practically guaranteed in a
process. Here’s a great example: A past client responsible for customer
complaints was recording the complaint information from the customer on
a form. Once completed, they placed the form in an orange file folder
until the next day, when the complaint could be distributed to an
analyst for evaluation and resolution.
only did that cause a minimum of a one day delay in responding to the
customer, the reason for performing this step had nothing to do with
addressing the complaint. What steps are in your processes that do not
add value to the execution of the process? If in doubt, ask yourself the
following question: “If I charged a customer for each step in my
process, would they pay me for this step?” The response will
tell you what to do.
Re-Work/Duplication of Effort
or duplication of effort is very common in a process – particularly when
a process crosses departmental boundaries or is a process not supported
adequately by technology. Consider what happens when you call your
credit card company or the telephone company. The automated answering
system requests you punch your account number in before speaking with a
representative. What is the first thing that happens when you reach a
“real person”? They ask for your account number again. Enough said…
Doing the Wrong Thing (Even if it Seems Like the Right Reason)
the execution of a business process for a purpose other than for which
it is intended can add a significant amount of lag time and/or expense
to a process. Consider the example earlier with the complaint
department, and the additional step of filing the complaint in a folder
for the following day. It is quite clear this is not a value-added step
in the process of handling a complaint, so why was this step added? The
manager of the department was trying to use the complaint handling
process for something entirely separate from complaint processing – he
was trying to collect metrics for performance reviews. (Go ahead and
laugh, but are you doing a similar thing in your business?)
reviewing the steps of your process, question the purpose of each step –
is it to contribute to the accomplishment of the process goal? Or is it
for something else entirely?
aware of, and addressing, these very common problems when reviewing your
organization can provide significant near-term improvement as well as
long-term benefits. The challenge, however, is taking the step back and
questioning each step in the process to ensure it is providing the value
to the end goal.
The Importance of
The Right Use of Enterprise
Departments Are Not Unto