This article first appeared in the January, 2006 edition of the Jacksonville Business Journal
Every organization does things that don't add any value. Employees can easily identify reports that no one reviews, forms that require too many signatures, steps and procedures that don't add value. Every unnecessary step or requirement adds time, decreases productivity, costs money and reduces profitability.
A Waste Story
A number of years ago I held a management position in a large, multi-national traditional corporation. After a major promotion, I received a memo that I had now reached the level to receive my own set of the company's policy manuals, and would be expected to maintain and keep them updated.
About two weeks later two company carpenters came to my office to find a suitable place for my policy manuals. They built a special shelf between eight and ten feet long for the policy manuals. Sure enough, a few weeks later I received a copy of the company's policy manuals - in volumes - totaling about eight feet in length. In addition, I now started to receive regular monthly updates with new policies to insert in their appropriate places to keep the manuals current.
I was astounded by the scope of these policies, so I started to browse through them. Many had been created years - even decades - earlier and related to circumstances long since irrelevant. Becoming curious, I looked for a policy on how to write policies. Sure enough, there it was. Then I looked for a policy on how to remove a policy, but none existed. It seemed that the entire process was additive - policies could be added, but not removed once approved.
Consider the time and money to build those shelves, print those manuals, update them regularly, and monitor a system in which about 10-20% of the information is currently relevant. Those policies developed slowly, one at a time, over many years. This is a great example of how waste creeps into a system and the compounds itself. Before long the bottom line is impacted - but the source of the impact is often invisible.
Excessive Signature Approvals
Many forms require multiple levels of approval and sign-offs that seem far beyond the level or scope of the cost or work being approved. How does that happen?
I have seen purchase requests - within previously approved budgets - that require five signatures for expenses between $500 and $1,000. I suspect that the cost of processing those approvals, the time for the five individuals to review the request individually and sign their name, and the lost time to obtain something needed while it goes through five signature levels (expedited of course) is already in excess of the $1,000 expense request.
How did that happen? The likelihood is that at some point there was an abuse of that procedure by one individual. In addition to addressing that person's inappropriate behavior, the company wanted to make sure it would never happen again. So it added another signature to the process. Then an audit at a later date showed up an irregularity, so another signature level was added. At some other time there may have been a cost reduction period and another signature was added to prevent unnecessary purchases. Over time a simple purchase request that should have required two signatures - the requestor and his/her manager - climbed to the upper levels of management for review.
Once the signature levels were added, no one was quite willing to suggest they be removed. After all, if you suggested the removal of a signature, the next time there was an abuse your suggestion would become the recipient of the finger of blame.
Similar circumstances lead to excessive checklists, redundant reviews of documents, and other similar activities - all designed to prevent future occurrences of past sins.
Turning Waste Into Productivity
The good news is that this problem can be solved the same way it developed.step by step. The method may be called process improvement, waste reduction, lean thinking, or something similar. They all suggest that the quickest low hanging fruit for improving efficiency, performance and profitability is to stop doing anything that no longer adds value. Look around. Start to question why all those signatures are needed, who reads those duplicate reports, why a procedure is required, what value is being added by inserting a particular step. You may be surprised to find that no one can remember the initial reason or find any current value in that activity.
By removing those things that do not deliver value to the customer or add profitability to the company we increase both the effectiveness and efficiency of our organizations.