The Systems Thinker Blog

3 Ways to Increase Business Efficiency Today!

Posted byRon Carroll

Delight your customers and put more money in your pocket by speeding up your business systems and processes.

Greater Process Efficiency

Research shows that the actual time required for making a product or providing a service is about 5% of the total elapsed time (Competing Against Time, George Stalk).

For example, a one-hour photo service only spends three minutes to process your prints. The week you are told it takes to approve your new building permit actually takes two hours; the rest of the time the application is sitting on someone's desk waiting to be worked on. There is a lot of idle and wasted time in most business operations, including yours!

The same research revealed that companies that reduce the cycle time of their processes—the steps from beginning to end—"enjoy growth rates three times the industry average with twice the profit margins." When process speed goes up, and lead-time goes down, you make more money and create happier customers.

Here are three things you can do today to speed up your business systems and processes for a better profit margin.

1. Eliminate Bottlenecks

Bottlenecks are easy to spot. For example, eliminate in-baskets that are full, or items stacked up in a cue or on a pallet. Focus on the weakest step in the process and elevate its performance. Hint: It's usually a system problem, not a people problem.

2. Eliminate Tasks that Don't Add Value

Eliminate processes that don't provide value. The customer does not want to pay for any wasted time—either should YOU. Look around for idle time, poor workflow, incorrect processing, unnecessary movement or handling, build-up of inventory, and so forth. As much as possible, stop doing the things that don't benefit customers and don't make you money. A careful inspection will surprise you!

3. Eliminate Rework

Improve the output quality of your business systems and processes to eliminate rework. Every process has errors—even in the office. Are your errors under one percent, or do you know?

I worked with a company that had frequent invoicing errors. The business owner had no idea. A lot of wasted time was spent by the sales and accounting departments reworking invoice problems with customers. (The actual lost money and goodwill from the mistakes was enormous, but that's another blog.)

Fewer errors and rework will increase speed and the sales throughput of your business. Remember, the cost of rework comes directly off your bottom line!

Find the Root Cause

Each of these tactics requires evaluating the steps in your core business systems and processes. Drill down to find the root problem and fix it! A small improvement in process efficiency will pay big dividends over the course of a year.

 

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Tags: Efficiency/Speed