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MNC Consulting Group Newsletter
November 2012
The Efficient Organization


StockToo Much is Bad for Business 


Office processes are often neglected, yet account for more than half the lead-time in many companies and can account for more than 25 percent of the cost of goods sold. In offices, an absence of measurement for processing activities or a lack of appreciation for the impact and benefits of lead-time reduction contribute to waste. Of these wastes, overproduction is significant.


When the business or individual produces more of something much sooner or faster than is required, the results include shortages in one area and chaos in another. In addition to wasted time and resources, overproduction impacts functionality of office machines and equipment; the extra wear and tear leads to more maintenance costs. Even worse, employees are kept busy doing work that does not need to be done while necessary work waits its turn.


Bottlenecks are often signs of overproduction. When one step in the process is completed more quickly than is possible for the next step to start, the bottleneck arises, sometimes bringing with it the "blame game." However, your co-worker's overflowing inbox is not necessarily the result of your co-worker's poor work performance or your superhuman ability. It may be a factor of your task being too simple and your co-worker needing another person to share his/her more complex task.


Backups in the process not only create more work for you and your co-worker, but also for others with whom the two of you interact. You both end up searching for documents that may be in the inbox or you end up consistently reprioritizing work. These things in themselves are other forms of waste. And because overproduction creates or hides all other types of wastes, it is known as the worst of all the wastes.


Of the things you do in a day, how many reports do you create that nobody reads? How many annual reports do you print just in case you may need them? To how many people do you copy your weekly spreadsheet because you think they may need the information? These types of overproduction take away your valuable time and impede your ability to complete work that is beneficial to both the organization and its customers.


In addition to self-initiated overproduction, systems and processes are the organization's major contributors to this waste. Redundant systems and duplicated records and systems cost more to maintain, yet provide little, if any, value to the organization.


Next time you think of blaming a co-worker for his/her slow pace of work, remember that even in a small company, 95 percent of lead-time in business processes is non-value added work. And the biggest culprits are poor systems and processes; not the people. Focusing your efforts on correcting these areas will reap the biggest rewards for your organization.


Pursuit of Profit
Balancing Act 


Sometimes it's very difficult to slow your pace of work to suit the process. But there are ways to accomplish this and enable the whole system to function efficiently.


The first step is through team work and cross training. In 2000, the Delaware Valley Industrial Resource Center underwent a process improvement project to its order entry system. As a result of the project, the company was able to reduce its lead-time by 66 percent from three months to one month. This was attributed directly to a cross-functional team approach.


In addition to teamwork, use u-shaped cells to eliminate overproduction. U-shaped cells help because they enable balancing of workflow from incoming to outgoing processes. This also maximizes worker efficiency by matching work content to available time.


To match work content to available time, look at your primary job functions. For example, let's say you have two primary functions each week with the split between function 1 and function 2 being 75 and 25 percent. In addition, your available time for the week is 30 hours for these functions (excluding breaks and other secondary functions). This means you have 22.5 hours to dedicate to performing function 1 and 7.5 hours for function 2. Use matching work content to available time to help you to not overproduce for downstream tasks.


Another effective method for eliminating overproduction is through the use of a pull system (Kanban). The Kanban is a visual system that tells you when to start and stop producing. For example, computerized workflow systems such as IT customer help desk applications give you a visual "picture" of what work is in process. The work is only handed off to the next person in the work cycle after the current task is completed.


Standardizing work is another great way to eliminate overproduction. Just remember to conduct regular reviews of your standards, so that efficiency is maintained. Ask questions such as: Is a particular step needed? Can it be improved?


Ultimately, the key to building a waste-free system is to eliminate overproduction. By doing so, the organization creates flexibility and generates cash. And, in turn, it creates value for its customers and prosperity for itself.

In My Humble Opinion (IMHO)

Did you know that 50 to 80 percent of total lead-time is consumed by office tasks? And of that lead-time, 95 percent adds no value to the final deliverable? And yet many managers and executives that I speak with still believe that their office and staff are as efficient as possible. They claim that it's difficult to quantify the value of office work. I think this is like looking at the big picture while restricted with blinders. Just because you can see the clear road in front of you doesn't mean that there's no chaos outside your line of sight.  IMHO. 


"The real distinction is between those who adapt their purposes to reality and those who seek to mould reality in the light of their purposes."

Henry Kissinger

About MNC Consulting Group
Our goal is to help you to dramatically increase efficiencies that immediately boost your profit margins.


ISSN 1925-8941   

Extreme Profits is a monthly electronic newsletter discussing how leaders can be more efficient and areas where organizations can save more money. 


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In This Issue
Too Much is Bad for Business
Balancing Act
In My Humble Opinion (IMHO)

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