According to a well-known proverb in the business world, there are two ways to boost a company’s bottom line. Simply put, you have two choices: you can either make money or you can save money. Cutting costs is no longer a viable approach for a corporation to achieve profitability. On the other side, waste and excessive internal expenses can deplete a company’s profitability. To win in a competitive business environment, both techniques must be applied.
When a corporation focuses on cost-cutting, the owners have a stated or implied goal of identifying large income leakage inside the company’s operating processes. So, if those processes can be improved to decrease waste, the company will essentially earn money from the inside out by lowering its overhead.
When it comes to cost-cutting, a company’s normal approach is to start with the “low hanging fruit.” To put it another way, in order to meet management’s requirements, middle management will hunt for superficial savings. As a result, switching to mugs instead of disposable cups or eliminating break room amenities are typically the first things to go.
Unfortunately, while such sites may provide some surface savings, the significant introduction of efficiency for any organisation requires a more in-depth process of uncovering weaknesses in how things are done inside. The approach of discovering these “money holes” within a corporation is referred to as “process improvement.” The goal of process improvement is to map out a business process from beginning to end and document the stages it goes through, such as handing over authority for the process and identifying areas where inefficient methods are causing excessive costs in the process execution on the way to the final stage of process completion.
The most frequently identified characteristics of organisational structure as prospects for a process improvement analysis are…
*Excessive overhead between departments.
Departments within a firm are notorious for adopting a fiefdom-like environment and becoming antagonistic, if not distrustful, of other departments. When this happens, department leaders will add paperwork and unnecessary procedures to allow “work” to flow from one department to the next or completed jobs to continue on their path. Excessive overhead can be costly at the departmental level and also stifle the corporation as a whole, lowering profitability.
*Communication problems.
A business process moves through an organisation as each department or entity adds value until the job is finished. A process can grind to a standstill if communications between departments or employees along the process chain are faulty, and it can take hours, if not days, for the missed communication to be found and the work to be placed into the cycle to be finished. This sluggishness or breakdown in communication can be extremely costly to a company. To remedy the problem, modern communication tools should be evaluated so that each relevant individual along the chain is immediately aware of work that needs to be done and can communicate to the next agent that their step is complete and the process is moving forward.
*An inefficient IT infrastructure.
Due to out-of-date computer systems that are not integrated with one other, data is taken from one system and transported into the next computer programme, only to be entered again at the next stop along the chain. By standardising and integrating data and processes, the process will be considerably expedited.
By streamlining the process of bringing a business requirement from conception to completion, we can eliminate much of the inefficiency and waste that has become inherent in the process. We may employ the most up-to-date integration designs, both at the IT and process levels, to quickly shift the process from one department to the next. As a result, the company has become more streamlined, and instead of “bleeding money” due to inefficiencies, it now produces money “from the inside out.”
