Process Bloat is everywhere in business. It’s often hidden well, like a secret addiction, and for good reason: if you knew it was there, you’d take it away. “Surely that’s not happening in my business,” you might say, “my staff are fantastic and they’re highly efficient!” There’s most likely nothing wrong with your staff, but everything wrong with the processes that they’re following.
Businesses change and grow: new ideas are added and unprofitable items are taken away. Except, unfortunately, in your business processes. Unless you make the effort to constantly review and enhance your processes, your staff will still be doing what they think they need to do, despite it now being completely unnecessary. They might be highly efficient in the way they do it, but ultimately they are still following bloated processes that waste their time and impact their productivity.
So how do you find out if is this happening in your business? There are a couple of very obvious indicators to look out for and you’ll see these happening to varying degrees.
1) Paper, paper, everywhere!
This is easy to see. Do your photocopy costs keep rising and your core business isn’t in Printing? Do you struggle to find space in the office to archive all your paperwork?
A lot of businesses still run with “historical systems” of creating multiple copies of Purchase orders, Accounts Payable invoices, Customer Invoices and Construction Progress Claims. At some stage, someone thought it was a good risk management strategy as many ERP systems couldn’t provide a reprint option and you always had a backup for missing paperwork. With current technology, this practice is no longer necessary – most ERP will easily reprint forms and a good document management system can electronically file your documents, eliminating manual intervention.
So why do people still use the old methods? Essentially, because they’re used to them. Or because they don’t have confidence that technology is safe. Or, most commonly, you have a Manager somewhere in your business who is still keen on “their” methods…
2) Your Admin staff work overtime EVERY weekend
In an efficiently operating business, your back office staff shouldn’t need to work overtime every weekend, unless you run a business that opens on weekends. So why does it happen? A lot of the time your back-office staff will say they have to do the extra time in order to get through their workload, because they have too much to do. You really have two options here – you either hire someone extra on face value, hoping it eases the load; or you invest some time and money in assessing what your back-office do and remove all the road blocks.
This can be a hard change to make, as your staff may have become attached to the extra cash. You may also need to consider some incentives to get them to embrace the new business ways and their suddenly-free weekends.
3) Your Finance Staff spend more time on problems than on processing
Do your AP staff complain that it takes too long to process invoices because “none of them are easy”? Do they have to touch and review every invoice in order to work out what was for, who asked for it and whether they should pay it? This one is common and comes from a process disconnect between Finance and Operations. It has a two-pronged impact:
a) Your Finance staff end up making Operational decisions. This doesn’t work if it means they have to decide whether the stock was actually receipted, or the stock variance is real, or if you really did want $5,000,000 worth of cable sent to that job you’re working on…
b) Instead of Finance working smoothly and quickly, allowing you to manage volume without adding more staff, your Finance staff end up spending the time-equivalent of $50 resolving each query.
This scenario is common in Accounts Payable and unfortunately means you’re spending more money just to pay others. Unfortunately, it’s just as common in Accounts Receivable – why should you have to spend more money to collect the cash you are owed?
Make sure it’s not your internal systems that are sabotaging your cash flow.
4) When you ask someone for a key Report, their reply is “Give me a week…” and the first reaction is to reach for a spread sheet and start keying information.
This one is unacceptable. In order to run your business optimally, you need quick access to key financial data. Too often, this is not the case. Sometimes this can be a quick fix – all you need to do is make sure the right data is captured and data entry into your ERP system is always up date. There is no excuse not to system-generate your report or to use this data for analysis. You might have a process-gap between your ERP and business needs, requiring some work with your ERP vendor to resolve it. Or, you could review whether you really need that process in place. Either way, the effort is worth the confidence you’ll have in your up-to-date financial decision-making.
5) Your staff spend more time in meetings planning and discussing necessary business change, than in actually implementing change
You know things aren’t working in the business and you’ve all been talking about change for a long time, but, nothing has happened… Change can be hard to initiate. When your staff are long-timers, or the problems are too big, the idea of process change can often frighten people into “meeting paralysis.” This is when a bit of external assistance can help you move along. Sometimes all it takes is a fresh set of eyes to find a new path through the process.
No matter how good your staff are, you still need to periodically review your business processes. As your business evolves for maximum profitability, so should your processes. So take a few minutes and think through the check-list above. You’ll be surprised at what you find!
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