Most 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.

There 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.

Waste
The 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.

Wasted 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?

The 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.

Not 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
Rework 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)
Using 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?)

When 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?

Being 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.

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