‘How do we stop wasting money in business?’ is a question that is often asked by the leadership team in both lean and goods times. It is such a good question, after all why would you waste money if it can be avoided?
All too often though, the response is to cut back on something that looks wasteful without really understanding the impact. This can mean that something is cut that results in additional costs elsewhere - which far outweigh the initial saving.
So, let's get the answers on how to stop wasting money in your business:
1. Really understand how your business works
Businesses and organisations are complex. It is this complexity that leads to businesses wasting money. Inefficiency can creep in, in so many ways:
- Inconsistent working
- Inaccurate working
- Production of redundant outputs
And these are just a few examples. Also if only a small amount of money is wasted each time, as this is repeated, the costs mount up.
The only way to identify these inefficiencies is to really understand what is done in your business or how it works.
The best way to do this is to adopt a Business Process Management approach.
What is Business Process Management?
The most useful definition that I have found is as follows:
‘The discipline of managing processes (rather than tasks) as the means for improving business performance outcomes and operational agility.’ Gartner. "Business process management (BPM)".
What is a process?
A process is a series of actions or steps taken in order to achieve a particular end. A process is a transformation. It transforms inputs into outputs. For example, a process is the mechanism by which raw materials are converted into products, so baking a cake will involve taking various ingredients (inputs) and producing the cake (output) using the recipe (process).
Processes are best captured in a process map.
What is a process map?
A process map sets out in diagrammatic form the activities that transform inputs into outputs.
It is very visual way of representing how your business works.
Whilst process mapping can be done just using a process mapping tool, rather than a full business process management system, the resulting maps (of which there will be several hundred) will be hard to manage.
What is a Business Process Management (BPM) system?
This is a system that both enables you to easily capture your processes as process maps and also intelligently houses, manages and reports on them, allowing you most easily identify where to save money.
It is not a quick job to capture all the end-to-end processes in a business, so it is best to start with an area of the business which is believed to be inefficient and process map that in the first instance.
Alternatively, start with a process that is repeatedly performed – small efficiency gains in these processes quickly result in a lot of money saved.
2. Focus on the outputs
As we have seen, a process is a transformation, it transforms inputs into outputs. And it is the outputs that really count.
It is very easy for all of us to spend every day busy doing things, but if we aren’t producing anything – there is no output – it is very likely that what we are doing is wasteful.
This is very quickly picked up when actually doing the process mapping; keep asking the question - what is produced?
3. Ask the person who does the job
Whilst the person who does the process mapping doesn’t need to be the person who does the job, their input is really important. They, more than anyone, will know where the inefficiencies are and often are just waiting to be asked about them. They are also likely to have some pretty good ideas about what should be changed to make the process more efficient – and save money.
4. Look at the handover points
This is often where the most waste arises. One department produces something and it is not quite in the format that the receiving department needs it, so it needs to be reworked to make it useful. Or the receiving department no longer use it at all! Efficiencies are quickly picked up at the process handover points, and once addressed, immediately start to save money.
5. Look for the bottlenecks
If something is waiting to be dealt with at a pinch point or bottleneck, then it’s not delivering any value during all that time. Ask where the bottlenecks are - so that they can be tackled first.
6. Involve the person who owns the process
The process owner is the person who has the authority to change a process. Involve them in the process mapping, and then if a change is to be made, they can say then and there that it is approved.
7. Implement best practice
Very often the same process is delivered in different ways in different parts of the business. Once this is captured, the best practice process – the one which is most efficient – can be identified and adopted throughout.
8. Capture key data at the process level
Using a BPM system which allows you to capture and report on key data at the process level – i.e. attach data to the shapes in the process maps. This allows less obvious inefficiencies to be identified and addressed. It also enables you to quantify just how much money has been saved.
9. Model potential improvements
Once you have a process model of how your organisation currently works, this is the start point for modelling future options. Your BPM system should allow you the capability to model different scenarios for improvement, enabling you to understand the impacts before they are made. Thereby avoiding a great deal of upheaval with no money saved.
10. Continually look for ways to be more efficient
Identifying inefficiencies should not be a one-off exercise, but a continual exercise of looking at what you currently do and improving it.
We hope that you have found this article useful. As you may have gathered, here at Triaster, we have developed a Business Process Management system that delivers and supports all of the above.
Triaster has worked with hundreds of organisations since the early 1990’s and has captured some of the many insights we have gained from this experience, in this Process Mapping report. We would now like to share them with you.