The Hidden Cause of Inefficiencies

I have always believed the goal of every company is to continuously improve.  Improvement usually results from changing systems and processes that make people more efficient. 

The goal is three-fold. The more efficient you can make everyone…

  • the fewer of them you need
  • the more you can pay the ones who are left
  • hopefully you get to keep a little for yourself

Typically, when people look for these efficiencies they focus on the activities being performed.  According to Lean Manufacturing which was developed by Toyota, less than 10% of most processes relates to the actual duties performed, while over 90% relates to the time it takes to start the next task once the previous task was completed.

They have a really cool name for this – Non-Value Added Time.  

Many times the real opportunity is in the 90% compared to the 10%.

So how do you determine the amount of actual time and the amount of non-value added time?

  1. Lay out the actual workflow required to complete a process.  Plot the actual work on a flowchart to document the process.  Complexity is not the goal, but it does need to highlight the major components of the process and indicate where the hand-offs are.
  2. Measure the actions through observation and tracking. See the amount of time it takes to complete the activity and how long it takes for the next step to be started.  You are looking for the cues and how long it takes to go from one cue to the next.   Make sure you document the steps needed to correct any problems.  Now determine how often problems occur.  These steps are considered non-value added time.
  3. The last step is a simple equation:

non-value added time ÷ SUM of total time  =  the percentage of non-value added time

Once you have this information, you can start looking at where the greatest amount of non-value added time is occurring and then you can start asking questions. Why does it take so long, what happens if we did it this way? Can we consolidate the functions so only one person is responsible? And so on.  My experience tells me you will be shocked at how much non-value added time there is and the reasons for it.  My favorite is, “We have always done it that way.”  I hate to say this but that is a cop out.

Unfortunately, in this situation, the gold is in the details.  Most of us really don’t want to do the work to truly flowchart all of the various disparate operations within the business.   I wish I could you give you another option to help determine the amount of non-value added time your processes are generating, but I am only aware of one.  Flowchart your business, start measuring, make course corrections, then do it all again.

Constant evolution is at the core of why great operations are great. So take the time to make yours better. You’ll gain more than just time.

By Greg Thiesen, CEO of Red Book Solutions

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One response to “The Hidden Cause of Inefficiencies

  1. The fact is that there is a compound effect as the process is applied all along the value chain.

    Great article Greg…thanks for sharing!

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