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The Key to Profitability: Reduce Process-Generated Waste

Jan 18, 2011 11:00:00 AM

Businesses run off process. They succeed with good process; they flop with bad process. Process is everything. Process is what renders a company efficient, maintainable, or a huge godawful mess.

We’ve said before that the profit’s in the process. It’s true. As a company you may sell the coolest product in the world, with sales topping 1 million per day, and flop due to poorly-built internal processes.

The fact is, processes can generate expensive waste within an organization – waste more costly than what most of us consider our greatest expenses (hardware, space, etc). Take this for example – and note that this is stripped down intentionally and doesn’t account for much of what’s taken into account when improving process. If one process isn’t well-defined, and causes 50 employees to spend 1 hour completing a processes that could take 1 minute, that’s 50 employees x 59 min x (average employee salary ÷ 2080 hrs/yr). Assuming the salary divides to $20/hr, that’s nearly $1,000.00 of waste every time the process is performed. If the process happens daily, that’s 246 days x $1,000.00 ($246,000.00) of waste annually from just one business process. You get the idea.

The key to profitability isn’t just sales or reputation. It’s sustainability inside your business doors – the ability to provide long-term economic well-being to your company. That’s why a part of our mission is to “leverage technology to help businesses do more with less – promoting sustainability by reducing process-generated waste.” It’s the same idea as reduce, reuse, recycle – instead of reducing physical waste to promote a more sustainable environment, reducing process-generated waste (time, money, misc business resources) promotes a more lean, efficient, sustainable business environment.

To summarize: Businesses are made up of thousands of processes. Each process is intimately linked with other processes. If one process is completely inefficient, it impacts other processes negatively – and the costs of inefficiency add up in a sort of domino effect that can be invisible to the business. Ideally, every process should be predictable and repeatable, doing the most with as little resources (time, money, people) as possible. Technology is often how that’s executed successfully – and the more business processes a technology supports, the more valuable it is.

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