Are Your Business Processes Wasteful?
Entrepreneurs often find themselves in unique positions when it comes to creating more value for their time. Everyday life is hectic for the business owner, and they often find themselves rattled by unnecessary barriers. Often, they look at the clutter and find this web of obstacles so complicated that we cringe at the idea of sorting it out. When your time is precious, it’s important to take a look at your daily routines and find out what is necessary and what is not.
There are many options in how you manage your day and how your everyday processes make your business function. But we don’t always look at these everyday functions to see if they are productive enough for our business. Sometimes we feel that our day-to-day is the way it always was, and, after all, it works.
But, when you take the time to slow down and identify your processes, you can maximize the effectiveness of your time spent on your daily routines and identify areas that are not beneficial to the success of your business. The lean methodology is the tool to identifying these opportunities.
A quick story
In 2003, I was working at Honeywell. At that time we were subject to revising all of our credit applications for our customers. Due to the recent changes in the financial industry by Sarbanes-Oxley, we had thousands of customer records to review. Honeywell was a proponent of the Six Sigma process, this was my introduction to the lean methodology.
With boxes of files, our world was overstocked with customer information that needed to be updated. In order to reduce our time reviewing data, we had to devise a plan of attack and review the standard processes of credit reviews and make them efficient. Our credit processes were dated and did not seem to be the best approach to gathering information, given the advancements in the finance software industry. We created a plan and tested to see if it was efficient on a sample size of credit reviews.
After examining the new process I had to determine if all the criteria were being met. There was some trial and error as I noticed that not all customer information is created equal. We noticed that information that was once considered relevant in the process were no longer requirement as it did not meet regulations. After some additional testing, we were able to reduce the process time and become efficient in processing the credit reviews.
Sometimes doing something because that’s the way it always been done prevents innovation. Through lean methodology, we were able to provide a streamlined process and eliminate the waste.
What is lean methodology?
The lean methodology is the process of creating more value with less input or reducing waste. Although lean is often used in manufacturing, we can relate it to our processes that we use in our daily lives. In lean, the goal is to deliver higher value by removing non-value-adding elements and stages—waste—in both the outcomes and the processes.
The fight for eliminating waste is never-ending and requires continuous development from every member in your business. The lean methodology also takes into account the human aspect of the equation, and thus provides a holistic framework for improving productivity. As we push to gain control of our lives, we can take ideas from lean and eliminate waste. In return, we become more productive as entrepreneurs and individuals.
So what is waste?
Waste can be identified as anything that doesn’t positively change the form, fit, or function of a process. If it prevents the flow of the process, it may be considered waste. When we look at our daily processes, we need to take a look at potential waste and identify it. Is this necessary or is this an obstacle that is preventing productivity? The lean methodology identifies eight types of waste:
Over-processing: Adding more value to a process that will not be used
Motion: Needless movement such as searching and gathering information
Transportation: Unnecessary daily processes
Excess: Anything that is in excess of what is required
Waiting: Delays between when a process ends and another begins
Defects: Any aspect of a process that does not conform to the need
Overproduction: Production of a process that is beyond need for immediate use
Unused employee creativity: Not tapping into employee talent
So as we look at ways to remove waste, we must look at our current process and identify what needs to change to make it more efficient. To maximize our processes we do not need to look at cutting out all our daily duties but rather at working smarter and not harder.
Four steps to improving your processes
When using lean, the term Kaizen is often used. Kaizen is derived from two Japanese characters: kai, meaning “change” and zen meaning “continuous improvement.” Eliminating waste in the value stream is the goal of Kaizen, below is a quick outline of improving your processes:
Plan: Create a plan for change, identifying specifically what you want to change. Define the steps you need to make the change, and predict the results.
Do: Carry out the plan in a trial or test environment, on a small scale, under controlled conditions.
Check (or study): Examine the results of your trial. Verify that you’ve improved the process. If you have, consider implementing it on a broader scale. If you haven’t improved the process, go back and try again.
Act: Implement the changes you’ve verified on a broader scale. Update the standard operating procedures.
The lean methodology has proven to be effective—when we all think lean. If we find ways to reduce waste and work smarter not harder we can be successful in our businesses and also have an impact on our personal lives.
Marco Tovar is an accounts receivable specialist at Infusionsoft. With over 20 years in the finance industry, Marco has a passion for processes and time management. A graduate of the University of Phoenix with a degree in business administration, Marco previously worked for Amcor, Honeywell, and Coseco Inc.
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