How Can We Increase Efficiencies?
One of the common concerns for organizations today is figuring out how to increase efficiencies. Because all organizations are comprised of many processes, the most effective method for increasing efficiencies in an organization is through process improvement.
“An effective and efficient process meets the requirements of its end customer by providing a quality product or service while increasing productivity by eliminating errors, minimizing delays, maximizing use of assets, etc. Additionally, the process must be easy to understand, customer friendly, easily adaptable to changing customers and business needs, provide a competitive advantage, and remove waste.”
Prior to implementing any process improvement initiative, it is critical that senior leadership determine how they are going to measure effectiveness and efficiency. Some measurements to consider when determining the effectiveness of a process are customer complaints, warranty costs, rework, due date integrity, market share, backlog, and rejects or unacceptable product or service. Process efficiency can be measured by the cycle time per unit or transaction, the resources used per unit of output, the value-added cost per unit, the non-value added cost per unit, or the cost of poor quality.
How do you currently measure the effectiveness and efficiency of your processes?
Process improvement without employee buy-in doesn’t work. The next critical issue to think about is how to get your employees on-board. Employees need to know senior leadership wants and encourages their input. After all, the employees are working and living in the processes, so who better to help the organization drive more efficiency.
Does your organization have a system in place that encourages employee feedback?
Once measurement and employee buy-in is established, the next step is to review current processes with employees to determine where and how the processes could be made more effective and efficient. A client organization manufacturing medical instruments followed these steps of implementing process improvement and achieved amazing results quickly.
- The organization eliminated a duplicated process on a number of products saving the organization $950,000.00 per year.
- They reduced cost by 32%.
- They reduced lead times by 82%.
- They reduced the number of steps an operator takes from 982 to 353.
- They reduced the number of operations from 24 to 15.
- They increased capacity 33%.
- They gained 11 days in lead-time.
- The cash savings was $396,000.00
If your organization found $950,000.00 through process improvement initiatives and increased efficiencies, how would your organization reinvest the extra $950,000.00 every year? Specifically, how would that reinvestment impact your organization in one year, three years, and five years? How long will you wait to make this kind of difference in your organization?
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