Inefficiencies can creep into any business. If they are allowed to continue they can seriously impact profits and growth potential. Customers don’t feel they are getting good value, the company struggles to make a profit, and frustrated employees jump ship.
So, what can a small business do to combat such inefficiencies? Firstly you need to examine each of your processes. This will help you to discover whether there are any unnecessary steps, whether anything is being missed in the process, and where things need to be made more rigid or more flexible to accommodate a more efficient process.
Businesses usually work through this process with the help of an experienced consultant. While more costly than completing this work in-house, a consultant will have the skills and experience to spot inefficiencies, the knowledge about what works to solve the problem, as well as both the methodology and objectivity to complete the process quickly and efficiently.
As a small business owner you can start by identifying the three enemies of efficiency: rigidity, variability and waste, as explained by Marieta Bencheva from Consulthon.
The enemy: Rigidity
In our fast-moving, tech-driven, globalised world, businesses need to be flexible and adaptable. One reason there are so many ‘disruptive’ businesses is that older, traditional sectors were slow and rigid when confronted with new technology. Rather than adapting to meet new customer expectations, they defiantly stuck with what they knew and were quickly usurped.
The same goes for employees within a company. Those who adapt to the needs of the business help make processes quicker and smoother while those who rigidly stick to what they know are likely to cause bottlenecks.
People within a rigid process may end up waiting for everyone else to make their contributions before making their own, for example. What’s more, they may not get on with anything else until they receive those contributions.
If these employees are allowed more flexibility, however, then they know they can get on with other things while they wait for information. You may discover technology that allows different teams to work on a document at the same time or a process that removes the need for multiple checks. Changing this process would lead to greater efficiency, faster output, and happier clients and staff.
It should be noted, however, that flexibility doesn’t mean unstructured. Employees need to feel confident and clear on how to manage their time/workload rather than being left entirely to their own devices and simply reacting to things as they come in.
The enemy: Variability
Combatting overly rigid processes is the first step in managing resources ‒ allowing staff to better utilise their time. Expecting 100% utilisation, however, is unrealistic and impractical. ‘Things’ happen and your teams need to deal with it quickly or risk it turning into a bottleneck.
Even on factory floors, where there is very little variability, manufacturing managers may only plan their machines to operate at around 80-85% load. The other 75 minutes of the day are left unallocated to allow time to deal with unexpected ‘issues’.
When it comes to the modern office, teams can be pushed to work at near 100% load. This means there is no flexibility to deal with unexpected variability. By viewing workload across entire teams, however, you can introduce flexibility and improve your capacity planning.
Say, for example, that your design team currently needs to make any and all changes to graphics within a document. This then takes them away from whatever task they were doing and could cause a bottleneck or backlog. Training others within the business on how to make minor changes to graphics will alleviate this bottleneck and allow for greater variability.
The enemy: Wastes
Waste can be broken down into eight branches: transport, inventory, motion, waiting, overproducing, over-processing, defects, and skills. You may have noticed that these wastes spell out TIM WOODS ‒ a handy acronym for remembering them. Let’s look at each in turn:
This can apply to the movement of anything from goods, to people, to documents. Even a small amount of transport waste can build up over time. Looking for ways to decrease movement, shorten the distance or reduce the item size can all help to minimise transport waste.
Anything you buy or produce in bulk can be suddenly made redundant. For example, you may print 50 new customer forms in case you need them, but then the forms change. Those 50 forms are then a waste. Try to be as lean as possible with what you buy or produce, getting only as many as you realistically need. That way you can minimise inventory waste.
People need to move around to do their jobs, whether within an office, between floors or meeting people in other venues. This physical movement of people also takes time, money and effort which can quickly lead to waste. Say, for example, that your marketing team often need to meet your design team, but one team is based on the 4th floor while the other is on the 12th. This will waste a lot of time and money as people go up and down between the floors. Try to look for ways to rationalise the placement of people to help minimise motion.
This is connected to the point about rigidity above. If people are waiting to proceed on a particular task until someone else has made their contribution, you create waste. When different teams have different priorities, you can end up with some very long delays. Introduce more flexibility into your processes to minimise the time wasted waiting around.
If you produce more than you need, stock turns into inventory (see above) and is at risk of redundancy. Try and be as accurate as possible when assessing the needs of your customers and anticipating future orders. Improving this may require new technology or processes but will help to avoid overproducing and paying to hold stock.
You want the document you produced to be incredible, but does it really require checking three or four times before it goes to the client? Is it really about improving work or about including people in the process? By providing clear briefs you will help to minimise the checking needed, the number of mistakes made, and the number of people included in the process.
Mistakes devalue your output, take time to correct, and are demoralising for staff. Some mistakes will always happen, but unclear briefs or communication, a lack of information, and poorly defined processes will dramatically increase defects. People need to know clearly what’s needed, what the intended outcome is, what’s important, and how to go about it. Otherwise, they will experiment with novel processes to achieve an unclear objective, introducing many mistakes and inefficiencies along the way.
People need the relevant skills for the task at hand. Sounds obvious, I know, but managers so often end up misusing the skills within a team. For example, I’ve seen experienced copywriters being used for time-consuming admin tasks and I’ve seen interns being thrown onto sales calls. Misuse of skills is not only an inefficient use of personnel, but it also leads to mistakes.
By working through each of these potential areas for inefficiency, you will gain a good overview of the processes used by your business and a fair idea on how to improve them. However, thinking back to point number one, rigidity, it is important to be flexible in your approach. In a startup, for example, it may not be possible to establish clear processes as people are managing multiple roles.
As the business expands, eliminating inefficiencies becomes increasingly important to growth. Upskilling employees can be crucial to keeping them motivated in the long-term, for example, and it will help manage workload should someone go off ill.
Keep these points in mind as your small business grows and use them as red flags to be resolved when the business has the capacity. For any small business, it is important to keep inefficiencies to a minimum if you want to succeed in growing your business and your profits. You can start hunting down the inefficiencies with your team. This can be followed by bringing in experts to help in a specific area as your business grows.