If you ever thought:
“Hmmm… wouldn’t it be nice if I had a one-pager list of the tools that people use to improve process efficiency?”
Then today is your lucky day!
I have listed below my compilation of the main tools and approaches I found which other executives and consultants use to directly or indirectly process efficiency.
And, even though this list is not exhaustive, I have never found anything more useful than it to make sure you are not overlooking anything important.
By the way: if you see anything missing, please send me a note and I will be happy to include it in the next edition of this list.
1. Relocate: the first group of approaches involve ‘relocating’ people or processes.
Examples of different types of relocations include:
- Outsourcing or relocation of processes to low-cost locations
- Crowdsourcing
- Analyzing “build versus buy”
- Renegotiating contracts
Some probing questions to determine whether there are significant efficiency-boosting opportunities through relocation include:
- What are our most significant transactional or rules-based activities?
- Which categories of activities have not created value in the past for us?
- What are our most significant suppliers and purchase categories?
2. Use technology: the second group of approaches involve capitalizing on productivity-improvement technologies.
Examples of different approaches to using technology for efficiency include:
- Automating processes
- Exploring analytics and knowledge work automation opportunities
- Exploring real-world interface technologies (e.g. IoT)
Some probing questions to determine whether there are significant efficiency-boosting opportunities through technology include:
- Which of our processes have significant costs, require low deliberation and could benefit from acceleration or error reduction?
- Which data we do not have or is laborious to obtain which could expedite or eliminate significant process steps?
- Which are the significant repetitive deliberations?
3. Improve processes: the third group includes the approaches that typically comes to mind when thinking about improving efficiency.
Examples of different approaches to improving processes include:
- Eliminating redundancies
- Consolidating processes and platforms and capturing economies of scale & scope and minimizing interface costs
- Eliminating rework, aligning cost with value, debottlenecking, standardizing, and reducing batch sizes
Here the key question is which process steps have significant costs?
4. Manage demand: an area often overlooked are approaches to change the flow of demand
Examples of these processes include:
- Modifying demand patterns including volume, timing, sequence, etc
- Segmenting, prioritizing and aligning service level requirements to “true” needs
- Managing risks and anticipating changes in needs
Some questions to unearth opportunities include:
- Which process inputs are significant?
- Which of them have high variability?
- Which of them are low value-adding but have high-performance quality?
5. Align organization: the fifth group includes approaches to align the organization with its objectives.
For example:
- Flattening structure, increasing span of management, pushing low value-adding tasks “down”
- Aligning governance with value, removing complexity, harmonizing levels
- Improving culture, training employees
Probing questions to determine if these have legs for your problem:
- What is the span of management by level?
- What percent of the time is spent managing direct reports?
- What percent of the time is spent approving, consulting or being informed of processes not under their direct responsibility?
6. Create value: last but not least, improving value delivered has the potential to improve financial efficiency as well as improving most levers described above.
Some approaches include:
- Turning cost centers into profit centers (e.g. data entry as a service to competitors, etc)
- Changing pricing and business models (e.g. charge for customized reports)
- Product and service innovation
Probing questions here include
- Which processes we are a leading performer and have significant costs?
- Which of these processes will require significant redesign due to trends?
- Which processes have significant costs but no direct revenue?
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AGAIN: if you noticed anything missing from my list, your contribution is much appreciated. Please send me a note and I will make sure to include it in future editions.
