Eliminating waste while protecting capacity and capability
Nigel Kippax, MD, KC Change Consultants
As organisations grow and become more complex, we naturally break down the work required into areas of specialism. We create organisational structures of separate departments, each with an assigned manager and budget.
When it comes to cost cutting, many leaders will refer back to the organisational structure and request each budget holder to contribute their own 10%, 20% or even 30% to the required savings.
But are we missing something here? Is the reduction in costs our single aim or could it be a consequence of other actions?
It should be possible to significantly reduce operating costs while also protecting, not destroying, capacity and capability.
Eliminating Waste
Think of riding a bike or using roller skates. If it's something you're attempting for the first time then it is going to be difficult, and you'll get little sympathy from the audience on the sidelines that have already mastered the skill and have long forgotten how difficult it was for them.
This is what is going to happen with the latest round of Government spending cuts. All Government departments have had to cope with cuts and have turned to the use of 'lean' improvement techniques to address the challenge. When your budgets get cut, these same departments are going to expect you to do the same.
Every operation that has evolved over time will have developed one or two 'wasteful' practices. There are not instilled deliberately and very often are not visible to those striving to do the best job that they can. What is needed is a technique to help leaders, employees and volunteers to see things differently, to provide new insights into how the services they provide can be delivered in an even better way.
Your organisation doesn't exist to run departments or silos; its purpose is to serve beneficiaries or customers. Rather than focus our energy on the internal structures that we created, we should focus on understanding how our people add value to our beneficiaries and how our 'core processes' cut across our departments. It is along these lines that we must aim to improve quality and consistency, and strive to eliminate activities that do not have a direct impact on delivering our core purpose. We must focus on value and eliminate 'waste'.
Identifying waste can be a straightforward activity and 'value stream mapping' is a practical way of representing the key steps in delivering service. They capture lots of information on, for example, the movement of items during delivery, the level of quality rejects and where there are delays in providing the service. Once mapped, the entire service delivery system can be examined to see which activities are adding value and which are destroying value by either adding extra cost or delays.
The whole focus is for your organisation to delivery its services 'on time', 'on quality' and 'on cost'. When waste in terms of time, materials and cost are removed; there is increased capacity to deliver 'on time'. Waste removal also contributes to improved consistency within the process as it becomes more robust, hence 'on quality'. Delivering at every step in the process on-time and on-quality will greatly support on-cost service delivery, helping you to ensure that every penny counts.
Significant reductions in costs can be achieved while protecting your organisation's capacity and capability, if financial savings are viewed as a 'consequence of improvement' and not a single objective.
Nigel Kippax is MD of KC Change Consultants. KC work with organisations to improve performance, eliminate waste and to 'make every penny count'
nigel.kippax@kclimited.org.uk
